learning Platform
跳过导航链接 > Home > Learning Platform > Social Accountability Criteria Zone > Events > Industry News  

Interpretation and Responding to “Provisions on Labor Dispatch”

Interpretation and Responding to “Provisions on Labor Dispatch”
On January 24, 2014, through a long game, finally Ministry of Human Resources and Social Security promulgated the Interim Provisions on Labor Dispatch (hereinafter referred to as the Provisions), which become effective as of March 1, 2014. As the first “departmental regulations” on labor dispatch, the Provisions serve as a connecting link between the Decision on Modifying the Labor Contract Law and the detailed rules and regulations on labor dispatch. To be a core standard in the field of labor dispatch, the Provisions will extremely change the employment environment and labor-capital relation in China, and bring enterprises new challenges of employ management and sustainable development.
Lawyer Hong Guibin, referring to the evolution of regulations, the suggestions on all sides, the first-tier cases on labor dispatch he dealt with and experience in serving employer, interprets the core clauses in detail to promote employer’s understanding and implementation.
Special Announcement: this article can not be taken as formal legal submissions, only for communication and reference.
Background of Lawyer Hong Guibin: Specializing in corporation law, labor law and dispute solving, familiar with human resources management and employ cost practices (social insurance/finance and taxation), and having practice experience in trans-regional employee relation governance, executives governance, competitive restriction, trade secret and many other fields. In 2013, he participated in the legislative experts’ discussion and suggestion on many rules and regulations such as the Amendment of Labor Contract Law, the Interim Provisions on Labor Dispatch, and Shanghai Municipality Work-related Injury Insurance Implementing Procedures (Amendment), and is invited to give instruction on labor dispatch to many cities such as Beijing, Shanghai, Guangzhou, Tianjin, Dalian, Jiangsu, Xi’an, and provides many world top-500 enterprises in China with comprehensive solutions to labor dispatch. He also has enriched experience in instructing many world top-500 transnational enterprises and domestic well-known companies, such as Oracle, France Airbus, Johnson & Johnson, Unilever, DuPont, Bayer, Schneider, Sodexo, BMW, Kraft Foods, Nike, Auchan, Hitachi, Lenovo, Tencent, Central Management Business School, the Royal Bank of Scotland. He successfully provided comprehensive solutions to transfer and relocation of large-scale labor relation for over 4000 people in world top-500 enterprises and provided comprehensive solutions of over 10000-people labor dispatch for leader enterprises in some industry.

Interim Provisions on Labor Dispatch
Chapter I General Provisions
Article 1 The Interim Provisions on Labor Dispatch (hereinafter referred to as the Provisions) are hereby developed in accordance with the Labor Contract Law of the People’s Republic of China (hereinafter the Labor Contract Law), Implementation Regulations for the Labor Contract Law of the People’s Republic of China (hereinafter the Implementation Regulations) and other applicable laws and administrative regulations in order to regulate the labor dispatch practices, safeguard the legitimate rights and interest of the workers and promote the development of a harmonious and stable labor relationship.
[Evolution of Provisions]

the Draft of the Provisions on Labor Dispatch of May 14, 2013

the Draft of Several Provisions on Labor Dispatch of August 7, 2013

Article 1 [Legislative Basis] The Provisions on Labor Dispatch are hereby developed in accordance with the Labor Contract Law of the People’s Republic of China (hereinafter the Labor Contract Law), the Decision of Standing Committee of the National People's Congress on Modifying the Labor Contract Law (hereinafter the Decision on Modification), Implementation Regulations for the Labor Contract Law of the People’s Republic of China (hereinafter the Implementation Regulations) and other applicable laws and administrative regulations in order to regulate the labor dispatch practices, safeguard the legitimate rights and interest of the workers and promote the development of a harmonious and stable labor relationship.

Article 1 [Legislative Basis] The Several Provisions on Labor Dispatch are hereby developed in accordance with the Labor Contract Law of the People’s Republic of China (hereinafter the Labor Contract Law), the Decision of Standing Committee of the National People's Congress on Modifying the Labor Contract Law (hereinafter the Decision on Modification), Implementation Regulations for the Labor Contract Law of the People’s Republic of China (hereinafter the Implementation Regulations) and other applicable laws and administrative regulations in order to regulate the labor dispatch practices, safeguard the legitimate rights and interest of the workers and promote the development of a harmonious and stable labor relationship.

 

[Lawyer Hong's Interpretation]
This article indicates the higher-level legal basis of “the Provisions”, including the Labor Contract Law, the Implementation Regulations for the Labor Contract Law and the Social Insurance Law and other rules and regulations modified on December 28, 2012. As the nature of the Provisions pertains to “departmental regulations”, in my opinion, the Provisions have clashed or will clash with the local regulations, local government rules and regulations promulgated (including will be promulgated) as well as the higher-level laws. As to this, we shall understand:
1. In the event that the Provisions clash with the higher-lever law, the higher-level law shall be followed;
2. In the event that the Provisions clash with the local rules and regulations promulgated at localities, according to the Legislative Law, where any discrepancy occurs between a local regulation and an administrative rule concerning a same matter and it cannot be decided as to which provision shall apply, the State Council should give its opinion; where the State Council deems that the local regulation shall apply, in the local jurisdiction the local regulation shall be applied; where the State Council deems that the administrative rule should apply, it shall request the Standing Committee of National People’s Congress to make a ruling;
3. In the event that the Provisions clashed with the government rules and regulations promulgated at localities, the State Council shall adjudicate.
It should be noted that, in the process of administrative supervision involving labor dispatch, according to the Regulations on Labor Security Supervision, the departmental regulations can be taken as the higher-level legal basis of administrative punishment. In the process of labor dispute arbitration and lawsuit, according to the Provisions of the Supreme People's Court on Citation of Such Normative Legal Documents as Laws and Regulations in the Judgments (Interpretation No. 14 [2009] of the Supreme People’s Court), the legal and valid departmental regulations examined and confirmed can be taken as basis for judgment (indirect reference); where the People’s Court deems that the regulations violate the higher-level law, the regulations shall not be applied.
Article 2 The Provisions apply to the labor dispatch service provided by a labor-dispatching unit and the employ of dispatched workers by an enterprise (hereinafter referred to as the employer).
The Provisions also apply to the employ of dispatched workers by a partnership such as an accounting firm or a law firm incorporated by law, a foundation or a private non-enterprise entity.
[Evolution of Provisions]

the Draft of the Provisions on Labor Dispatch of May 14, 2013

the Draft of Several Provisions on Labor Dispatch of August 7, 2013

    Article 4 [Employer] The employer in the Provisions refers to the employer who employ labor-dispatched workers, including state organs, institutions, enterprises, social organizations, individual economic organizations, private non-enterprise units as well as accounting firm or law firm incorporated by law and other partnership organizations, and a foundation.
Article 49 [Organs and Institutions Use Labor Dispatch] The Labor Contract Law, the Decision on Modification, the Implementation Regulations and the Provisions shall be applied when Organs and Institutions use labor dispatch.

Article 2 [Definition] The labor dispatch in the Provisions refers to an employ method that the employer dispatches the employed worker to other employer in business operation form, and the latter employer directly manages the labor process of the worker.

[Lawyer Hong’s Interpretation]
This article indicates the scope of employer subjected to the Provision, definitely including the “enterprises, partnership, foundation and private non-enterprise unit” stipulated in the Labor Contract Law and the Implementation Regulations for the Labor Contract Law. As for the content of “the other organizations", whether does it contain the state organs and institutions stipulated in Article 2 of the Labor Contract Law? Or whether does is contain “the representative organizations in China founded by foreign legal person”? Or contain the “branches” of employer? In my opinion:
1. As for the dispatch by state organ and institution, according to Minister of the Ministry of Human Resources and Social Security Labor Relation Department Officer’s answer to reporters’ questions on the Interim Provisions on Labor Dispatch on January 26, 2014, “The employment issues independent of state organ and public institution are being gradually solved in a proper way with the reform deepening and the law developing. The Provisions may not apply to this labor dispatch employment. Next step, we will comprehensively consider, coordinately promote, and gradually standardize it.” Therefore, from the change of draft regulations, the labor dispatch by state organ and institution does not pertain to the regulated subject. This is the main reason for why the original Several Provisions on Labor Dispatch was changed to the Interim Provisions on Labor Dispatch. Certainly, we should not take the state organs and institutions as “grey zone” of labor dispatch. Actually, after the modification of the Labor Contract Law, many regions have already carried out the investigation and cleanup for the informal staff under management system and labor-dispatched workers in the state organs, institutions and social organizations, and with the harmonious promotion of reform, this problem will finally be gradually settled down.
2. As for the dispatch of representative office, according to Article 25 of the Provisions, the representative office is still in the scope of the Provisions, but the exceptional regulations are made in dispatch of temporary, auxiliary and alternative position and dispatch proportion.
3. As for the dispatch of employer’s branch, according to the Implementation Regulations on the Labor Contract Law, it can be directly taken as the employer. For the independent employ rights as principal, despite this Article do not define it, according to Article 4 of the Provisions, the "other organizations” shall include the branch founded by the employer (such as branch company).
Chapter II Scope and Proportion of Employment
Article 3 An employer may employ dispatched workers in temporary, auxiliary or alternative positions only.
For the purposes of the preceding provision, the term "temporary position" refers to a position with a term of no longer than six months; the term "auxiliary position" refers to a non-primary business position aimed at providing services to a primary business position; and "alternative position" refers to a position that is filled on a substitute basis to replace a regular employee who cannot work for a given period due to full-time study, vacation or some other reason.
Before the employer determines an auxiliary position in which dispatched workers will be employed, its employees’ congress or all employees shall hold discussions and provide proposals and opinions, and the employer shall negotiate with the labor union or employees’ representatives on an equal basis, and the matters concerned shall be announced internally.

the Draft of the Provisions on Labor Dispatch of May 14, 2013

the Draft of Several Provisions on Labor Dispatch of August 7, 2013

Article 8 [temporary, auxiliary and alternative position] The labor contract employment is a basic enterprise employment form in China, and the labor dispatch is a supplementary from, only for temporary, auxiliary and alternative position.
Auxiliary position refers a non-primary business position aimed at providing services to a primary business position. Before the employer determines an auxiliary position in which dispatched workers will be employed, the employer shall, according to the peculiarity of industry and business, provide the information for labor dispatch such as the auxiliary position list, responsibility of position and requirement for position, and the employer shall negotiate with the labor union or employees’ representatives on an equal basis, and the matters concerned shall be announced internally, under the supervision of employees and society.

    Article 4 [temporary, auxiliary and alternative position] The labor contract employment is a basic enterprise employment form in China, and the labor dispatch is a supplementary from, only for temporary, auxiliary and alternative position.
Auxiliary position refers a non-primary business position aimed at providing services to a primary business position. Before the employer determines an auxiliary position in which dispatched workers will be employed, the employer shall, according to the peculiarity of industry and business, provide the planned auxiliary position list for labor dispatch employment, and the employer shall negotiate with the labor union or employees’ representatives on an equal basis, and the matters concerned shall be announced internally, under the supervision.

[Lawyer Hong’s Interpretation]
Due to variability of market and discrepancy of economic entity itself, it is relatively different to confirm “auxiliary position” in entity. For example, in general, the “driver” of a general enterprise can be taken as “auxiliary position”, but if of freight and logistic company, the drive may be a "primary business position". Therefore, no matter viewed from the business scope registered in “business license” or the “primary business income” in accounting statement, it is infeasible to confirm the scope of auxiliary position by entity. As I expected before, the replacement of “entity confirm” to “procedure limitation” is the realistic choice of auxiliary position definition.
The “procedure limitation” of auxiliary position (democratic procedure + publicity procedure) mainly refers to Article 4 of the Labor Contract Law that is it is determined by workers’ congress and general membership meeting. Thus, enterprises may be interested in the following issues:
1. Whether shall an enterprise set up workers’ congress? Whether to deliberate suggested issues or approved issues by workers’ congress can determine the auxiliary position list? Can the deliberation of workers' congress be substituted by labor union? For the above questions, the enterprises in Shanghai can refer to the Shanghai Municipality Regulations on Workers' Congress. An enterprise with more than 100 employees has the legal duty to set up workers’ congress. Since auxiliary position list is closely related to interests of workers, deliberation of approved issues by workers’ congress seems more reasonable. Of course, the major obstacle lays in whether labor-dispatched worker can participate in the discussion as a worker representative, and whether it will come as an unfair situation that the insider’s fate (labor-dispatched worker) is determined by the outsider (labor contract worker reprehensive).
2. The legal consequence of enterprises that set up auxiliary position list without through democratic procedure. Although according to Article 22, “in the event that a receiving unit violates Paragraph 3, Article 3 of the Provisions, the competent department in charge of human resources and social security shall order it to make corrections and give it a warning; in the event of any damage caused to the dispatched worker concerned, the receiving unit shall be liable to make compensation according to law”, it is mainly supervised afterwards in the form of administrative punishment. But in the event of dispute, it is inevitable that the worker apply for arbitration to confirm the invalidity of labor dispatch and real labor relation with the employer. At this time, will the arbitration committee refuse to handle or be forced to arbitrate in entity? If it is arbitrated in entity, what are the detailed consideration factors? If an employer and a worker confirm the auxiliary position in the written agreement beforehand, whether can the judicial organs further interfere? All these detailed question need great attention of supervision department at localities and the law-enforcing and juridical statements shall be unified.
3. Can the democratic and publicity procedures for Auxiliary position list be supplemented and corrected? Is there any retroactive effect after supplementation and correction, for example, after a worker applied for an arbitration, can the employer be exempted from liability if it makes supplementation and correction before court trial and survey end? In my opinion, we should definitely understand the relation between “form” and “content”. The democratic procedure only confirms one legal step of auxiliary position, and can not deny the content of entity on the ground of procedural effect, if combined with business scope of company, employees’ job duties and that whether the work content can judge the scope of auxiliary position, in the process of entity confirmation, the employer have the burden of proof and right to interpret, and the judicial organs shall avoid excessive interference in autonomous rights of employer.
Article 4 An employer shall strictly control the number of dispatched workers it employed, which shall not exceed 10% of the total number of employees.
For the purpose of the preceding paragraph, the total number of employees refers to the sum of the number of labor contract employees and the number of dispatched workers.
The employer that calculates the proportion of the dispatched workers it employed refers to the unit that may conclude labor contract with its employees in accordance with the Labor Contract Law and its Implementation Regulations.

the Draft of the Provisions on Labor Dispatch of May 14, 2013

the Draft of Several Provisions on Labor Dispatch of August 7, 2013

    Article 9 [Employment Proportion] An employer shall strictly control the number of dispatched workers it employed. The number of dispatched workers in auxiliary position shall not exceed 10% of the total number of employees.
The employment proportion for labor dispatch refers to the percentage of the number of dispatched workers employed in current auxiliary position to the sum of the number of labor contract employees and the current number of dispatched worker.
The employment proportion for labor dispatch is calculated in the unit of the employer stipulated in the Labor Contract Law.

    Article 5 [Employment Proportion] An employer shall strictly control the number of dispatched workers it employed. The number of dispatched workers in auxiliary position shall not exceed 10% of the total number of employees.
For the purpose of the preceding paragraph, the total number of employees refers to the sum of the number of labor contract employees and the number of dispatched workers.
The employer that calculates the proportion of the dispatched workers it employed refers to the unit that may conclude labor contract with its employees in accordance with the Labor Contract Law and its Implementation Regulations.

[Lawyer Hong’s Interpretation]
Labor dispatch proportion is originally in adjustment of collective labor relations, while this article adopts a simple 10% to determine the proportion of all units in all industries, which will bring a massive impact and challenge especially for the industries and enterprises in which large number of dispatched workers are employed.
Compared with the draft, 10% is no longer confined to “auxiliary position”, instead the sum of temporary, auxiliary and alternative position shall not exceed 10% of the total number of employees. Due to a definite proportion, we have to discuss some detailed questions on proportion calculation:
1. Calculation unit: the Provisions definitely take the “employer” as a unified statement, that means the branch company and subsidiary company shall be calculated separately. It may be not beneficial for the affiliated enterprise and enterprise group, which originally can comprehensively adjust the number of labor dispatch employment within the group.
2. Bas figure for calculation: According to the Provisions, “the total number of employees refers to the sum of the number of labor contract employees and the number of dispatched workers.” Thus, will the employees that concluded a part-time labor contract with an employer be counted in? Or will the employee that do have labor relation but without labor contract conclusion (or without renewing the labor contract) be counted in? Or will the foreign employee that concludes the labor contract, the retired workers back to work and laid-off workers keeping labor relation with employer be counted in? Based on the complexity of employment relations, it may be biased to simply use the formal requirement, the written labor contract, to judge.
3. Calculation time point: Since the dynamic employment of enterprise and regular employee turnover, in can be said without exaggeration that some enterprises have different labor dispatch proportion every single day. Thus how can the labor administration departments dynamically measure and supervise the proportion? According to the original draft, based on “usage in current period” that is the average number of the previous 12 months, which also brings new issues that an enterprise can not predict the future average and the increased proportion can not be easily controlled due to the demission of dispatched worker. How to settle down this technical knot is concerning the effective implementation of law enforcement.

Chapter III Conclusion and Performance of Labor Contract and Labor Dispatch Agreement
Article 5 A labor-dispatching unit shall conclude a written labor contract with the workers to be dispatched for a fixed period of at least 2 years according to law.

the Draft of the Provisions on Labor Dispatch of May 14, 2013

the Draft of Several Provisions on Labor Dispatch of August 7, 2013

    Article 12 [Labor Contract Period] The labor-dispatching unit shall conclude with the dispatched workers to be dispatched a fixed-term labor contract for a period of not less than two years and shall pay labor remuneration on a monthly basis.
Article 13 [Open-ended Labor Contract] The labor contract concluded between dispatched workers and labor-dispatching unit follows the Paragraph 2, Article 14 of the Labor Contract Law.

Article 8 [Labor Contract Period] The labor-dispatching unit shall conclude with the dispatched workers to be dispatched a fixed-term labor contract for a period of not less than two years. Through mutual agreement, the open-ended labor contract can be concluded.

[Lawyer Hong’s Interpretation]
The conclusion of labor contract for dispatched workers, according to the Labor Contract Law, definitely stipulates that the fixed-term labor contract for a period of not less than two years shall be concluded. In practice, a labor-dispatching unit and a worker sing the two-year contract. There are more and more situations that the contract is concluded for successive two times, but can these dispatched workers enjoy the same right with the normal workers of “mandatory conclusion of open-ended labor contract” stipulated in the Article 14 of the Labor Contract Law?
From the first draft, it seems that the Ministry of Human Resources and Social Security acknowledges that a dispatched worker shall be treated equally with a labor contract employee, and that the law do not indicates a dispatched worker does not follow the Article 14 and a dispatched worker shall not be discriminated in open-ended matter. But this statement was strongly questioned, because in practice the labor contract concluded between dispatched worker and labor-dispatching unit is dependent on the labor dispatch agreement and the position the employer provides, and the employer accepts the dispatched workers for the need of temporary, auxiliary and alternative position, so in nature the employment is flexible. If the labor-dispatching unit is forced to signed open-ended labor contract, it not only does not suit the flexible nature of employment, but also may cause the dispatched workers lose their job opportunities (the employer is not willing to sign the open-ended contract with dispatched worker, although the position for dispatch is in fixed period.). Therefore, the second draft deleted the statement of Article 13, and changed it to that through mutual agreement the open-ended labor contract can be concluded. But the second draft also bring the voice of question that the legitimate rights and interest of a dispatched worker are deprived of, so the final one only remains the first half, and leaves out the second half.
In my opinion, the Labor Contract Law lists “labor dispatch” in Chapter V “special provisions”, juxtaposed with part-time labor relation and collective contract, indicating its application differs with full-time labor contract relation, for example the part-time labor relation does not follow the Article 12 of the Labor Contract Law. Therefore, the “fixed-term labor contract for a period of not less than two years” stipulated in the articles on labor dispatch shall be taken as special provisions, especially where this special provisions clashes with the general provisions, the special provisions shall be followed. By now different regions have different understanding, fro example Jiangsu Province define that the dispatch employment shall not follow the open-ended principle. The employer shall judge in accordance with the local ruling statement.
Article 6 A labor-dispatching unit may agree with the workers to be dispatched on the probation period according to law. However, it may agree on one probation period with the same worker to be dispatched only.
[Evolution of Provisions]

the Draft of the Provisions on Labor Dispatch of May 14, 2013

the Draft of Several Provisions on Labor Dispatch of August 7, 2013

    Article16 [Probation Agreement] A labor-dispatching unit may agree with the workers to be dispatched on the probation period according to law. However, it may agree on one probation period with the same worker to be dispatched only.
After probation, the trial period for position or trial period for job agreed between a labor-dispatching unit and a new employer shall not pertain to the probation stipulated in the Labor Contract Law.

    Article11 [Probation Agreement] A labor-dispatching unit may agree with the workers to be dispatched on the probation period according to law. However, it may agree on one probation period with the same worker to be dispatched only.
The trial period for position or trial period for job agreed between a labor-dispatching unit and an employer shall not pertain to the probation stipulated in the Labor Contract Law.

[Lawyer Hong’s Interpretation]
This article deletes the statements on trial period for job agreed between a labor-dispatching unit and an employer in the original draft. In nature, the probation shall be taken as a period for mutual observation after an employer and a worker set up labor relation.
In this triangle situation of labor dispatch, since the right of using labor is implemented by an employer, the employer urgently need the “adjustment period” with a dispatched worker, so this article deprive of the right to re-dispatch worker to the second employer in disguise, although beneficial to the worker. But it also cause that a new employer can not accept the dispatched worker who is still in the period of the labor contract or who does not dissolve the labor contract with a labor-dispatching unit.
For the employer, the condition of labor relation with an employee shall be examined in order to ensure that the worker can be used without any problem in the first dispatch.
Article 7 A labor dispatch agreement shall specify the following:
(1) Title and nature of the job position in which the dispatched worker will be employed;
(2) Job location;
(3) Number of the dispatched workers and dispatch period;
(4) Amount and payment method of labor remuneration determined in accordance with the “equal work, equal pay” principle;
(5) Amount and payment method of the social insurance premium;
(6) Work hours, vocation and leave;
(7) Related benefits for the dispatched workers during work injury, birth-giving or illness;
(8) Occupational safety and hygiene and training;
(9) Expenses such as economic compensation;
(10) Term of the labor dispatch agreement;
(11) Payment method and criteria of the labor dispatch service fee;
(12) Liability for breach of the labor dispatch agreement; and
(13) Other matters that shall be included in the labor dispatch agreement as set forth in the laws, regulations and rules.
[Evolution of Provisions]

the Draft of the Provisions on Labor Dispatch of May 14, 2013

the Draft of Several Provisions on Labor Dispatch of August 7, 2013

    Article 28 [Labor Dispatch Agreement] When dispatching worker, the labor-dispatching unit shall conclude the labor dispatch agreement with an employer.
Labor Dispatch Agreement shall specify the following contents:
(1) Dispatch position and workplace;
(2) Number of the dispatched workers and period;
(3) Remuneration defined by the principle of equal pay for equal work;
(4) Amount and payment method of the social insurance premium;
(5) Payment method and standard for service charge;
(6) Responsibility for violation of agreement;
Except for the above articles, the labor dispatch agreement can also specify the following contents:
(1) Work hours, vocation and leave;
(2) Occupational safety and hygiene and training;
(3) Relevant matters during job injury or illness;
(4) Condition for return of dispatched worker, economic compensation and other charges;
(5) Relevant matters on handling labor dispute;
(6) Condition for dissolving labor dispatch agreement; and
(7) Other matters specified in the laws, regulations and other rules.

    Article 15 [Labor Dispatch Agreement] when dispatching worker, the labor-dispatching unit shall conclude the labor dispatch agreement with an employer.
Labor Dispatch Agreement shall specify the following contents:
(1) Name and nature of dispatch position;
(2) Job location;
(3) Number of the dispatched workers and period;
(4) Remuneration defined by the principle of equal pay for equal work;
(5) Amount and payment method of the social insurance premium;
(6) Payment method and standard for service charge;
(7) Responsibility for violation of agreement;
Except for the above articles, the labor dispatch agreement can also specify the following contents:
(1) Work hours, vocation and leave;
(2) Occupational safety and hygiene and training;
(3) Relevant matters during job injury or illness;
(4) Expenses such as economic compensation;
(5) Condition for dissolving labor dispatch agreement; and
(6) Other matters specified in the laws, regulations and other rules.

[Lawyer Hong’s Interpretation]
In this article, compared with the draft, we can discover some obvious changes:
1. It drastically added the “necessary clauses” and cut out the “conventional clauses” in labor dispute agreement, which reflects the great attention on the procedure of “contract conclusion” paid by the legislative department. In my opinion, the labor supervision department, due to the limited administrative resources, can only lay stress on the “formal examination” on employment of labor dispatch, to ensure that at least the content of agreement shall reach the legal requirement. It means that an employer shall actively promote the process of changing the Labor Dispatch Agreement through communication with a labor-dispatching unit to meet the compliant requirements;
2. The statement of “position nature” is added in the necessary clauses of labor dispatch agreement, that is it shall specify the position to be dispatched pertains to “which one” in the three of temporary, auxiliary and alternative position. Of course, whether the agreement on position nature in labor dispatch agreement can be an important proof for “auxiliary” definition remain to be solved by the experience of judicial practice, but at least it is beneficial for an employer.
3. The deletion of the statement on “conditions for returning dispatched workers in the first draft” means law maker gives negative comments on “the conditions for returning dispatched worker can be made by the agreement between an employer and a labor-dispatching unit”, which prevails in practice. It should be mentioned that, the Labor Contract Law does not contain the statement of “return for law violation”, and whether the “return by agreement” can be considered invalid due to “exclusion of worker's right” and “violation of prohibition regulations” is still in debate. In addition, the responsibility assigning mechanism of the “return for law violation” is ambiguous, such as that whether to pay as the original during return. In my opinion, the new provisions will not thoroughly settle down the above disputes, which remain to be solved by local judicial departments’ experience.
Of course, we also must pay attention to the retroactive effect of this article, under the condition that the return condition has been appointed in the labor dispatch agreement, if the local judicial department accept its effect, at this time whether the new provisions can retroact to have negative comments will be a matter that an employer must take seriously.
Article 8 A labor-dispatching unit shall perform the following obligations for the workers it dispatched:
(1) Inform the dispatched workers of the matters stipulated in Article 8 of the Labor Contract Law, rules and regulations that shall be observed as well as the contents of the labor dispatch agreement in a truthful manner;
(2) Establish training policies to educate and provide the dispatched workers with pre-job training and safety education;
(3) Pay to the dispatched workers the labor remuneration and other benefits in accordance with the requirements of the State and the labor dispatch agreement according to law;
(4) Pay the social insurance premium and complete the related formalities of social insurance for the dispatched workers in accordance with the requirements of the State and the labor dispatch agreement according to law;
(5) Urge the employer to provide the dispatched workers with labor protection and other occupational safety and hygiene conditions according to law;
(6) Provide the proof of dissolution or termination of labor contract according to law;
(7) Provide assistance in resolving a dispute between the dispatched workers and the employer; and
(8) Other matters specified in the laws, regulations and other rules.
[Evolution of Provisions]

the Draft of the Provisions on Labor Dispatch of May 14, 2013

the Draft of Several Provisions on Labor Dispatch of August 7, 2013

    Article 29 [Obligation of Labor-dispatching Unit] A labor-dispatching unit shall perform the following obligations for a dispatched worker:
(1) Truthfully inform a worker of the matters on the Article 8 of the Labor Contract Law and the rules and regulations the worker shall obey;
(2) Set up training system and instruct worker in pre-job knowledge to strengthen quality education and safety and skill training;
(3) Conclude the labor contract with a worker, cover and transfer social insurance and pay the social security premium for the worker according to law;
(4) Pay a worker labor remuneration and welfare benefits on time and in full according to the relevant regulations and labor dispatch agreement;
(5) Urge an employer to develop the conditions for labor safety protection and hygiene;
(6) Provide the proof of dissolution or termination of labor contract according to law;
(7) Provide assistance in resolving a dispute between the workers and the receiving unit; and
(8) Other obligations specified in the laws, regulations and other rules.

    Article 16 [Obligation of Labor-dispatching Unit] A labor-dispatching unit shall perform the following obligations for a dispatched worker:
(1) Inform the dispatched workers of the matters stipulated in Article 8 of the Labor Contract Law, rules and regulations that shall be observed as well as the contents of the labor dispatch agreement in a truthful manner such as position nature, social insurance and labor remuneration;
(2) Set up training system and strengthen quality education, such as pre-job knowledge, and safety and skill training;
(3) Conclude the labor contract with a worker, cover social insurance and pay premium for the worker according to law, and handle its transfer formality for the worker according to the Provisions;
(4) Pay a worker labor remuneration and welfare benefits on time and in full according to the relevant regulations and labor dispatch agreement;
(5) Urge an employer to develop the conditions for labor safety, hygiene and protection;
(6) Provide the proof of dissolution or termination of labor contract according to law;
(7) Provide assistance in resolving a dispute between the workers and the receiving unit;
(8) Other obligations specified in the laws, regulations and other rules.

[Lawyer Hong’s Interpretation]
This article specifies the legal obligation of a labor-dispatching unit. From the point of clauses evolution, there are two changes:
1. The formal provisions indicates that “according to the state regulations and labor dispatch agreement, pay the social insurance premium for a dispatched worker according to law”, which paves the way for the subsequent clauses on coverage of insurance by branch of labor-dispatching unit or employer in the event of labor dispatch to other places. For the employer of trans-regional dispatch, it is necessary to appoint the social insurance premium shall be paid by the labor-dispatching unit or its branch in the labor dispatch agreement. In the cases I dealt with, it is not uncommon that a labor-dispatching company signs labor dispatch agreement and its branch concludes the labor contract and pays social insurance premium. The quadrangle relation makes the separation of the four subjects in labor dispatch relation, labor relation and social insurance relation, containing great legal risk.
2. In the formal provisions, the statements of welfare benefits of a labor-dispatching unit is the “relevant benefits”, not limited to the scope of “welfare benefits”. In practice, the welfare form of an employer is increasingly diversifying, and the law maker considers that the dispatched worker shall have “equal pay for equal work” with formal employee. For the detailed form of benefits, it will not be considered, and it is relatively beneficial for a dispatched worker. The law maker hopes a labor-dispatching unit to define the detailed contents of equal pay for equal work in the labor dispatch agreement.
Article 9 An employer shall, in accordance with Article 62 of the Labor Contract Law, provide the dispatched workers with the position-related welfare benefits without any discrimination against the dispatched workers.

[Evolution of Provisions]

the Draft of the Provisions on Labor Dispatch of May 14, 2013

the Draft of Several Provisions on Labor Dispatch of August 7, 2013

    Article 30 [Obligation of Employer] An employer shall perform the following obligations for a dispatched worker:
(1) Implement the state labor standard, and provide the corresponding labor conditions and labor protection;
(2) Inform a dispatched labor of work requirement and labor remuneration;
(3) Pay overtime pay and performance bonus, and provide the welfare benefits related to the position;
(4) Provide a dispatched worker with the necessary skill training for the position;
(5) For continuous employment, implement the normal pay adjustment system; and
(6) Other obligations specified in the laws, regulations and other rules.

    Article 17 [Obligation of Employer] An employer shall perform the following obligations for a dispatched worker:
(1) Implement the state labor standard, and provide the corresponding labor conditions and labor protection;
(2) Inform a dispatched labor of work requirement and labor remuneration;
(3) Pay overtime pay and performance bonus, and provide the welfare benefits related to the position;
(4) Provide a dispatched worker with the necessary skill training for the position;
(5) For continuous employment, implement the normal pay adjustment system; and
(6) Other obligations specified in the laws, regulations and other rules.

[Lawyer Hong’s Interpretation]
According to the revised Labor Contract Law, an employer shall implement the equal pay for equal work for a dispatched worker, and implement the same distribution method of labor remuneration. This article adds the content on “equal welfares for equal work”, which is said to be a great pressure and challenge for an employer.
According to my experience of serving enterprises, the reason why many enterprises employ the dispatched worker is for the purpose of “unequal pay for equal work” and “unequal welfare for equal work”. For example, the employee under staffing system pays supplementary housing fund and supplementary pension insurance, while the dispatched worker does not pay. For monopoly enterprise and state-owned enterprise, and the gold content of “welfare” is higher. The equal pay for equal work is expanded to “equal welfare for equal work” in this article, and we can predict that, there will be more “welfare disputes” in the future, including arbitration submission and mass disturbance such as strike due to unfair welfare.
An employer shall definitely understand the inherent meaning of “non-discrimination” in Article 9 which refers to that an employer shall not take the identity to determine whether to deliver welfare or as the basis of delivering welfare. The inspiring remuneration and welfare set by an enterprise according to operation performance, work department, service year and individual performance pertains to the scope of autonomous rights of an employer. “Equal welfare for equal work” is not for initiating “eating from the same big pot”, and we should also combine with the actual condition of cases to make consideration.
According to this article, an employer shall trim the existing welfare and setting of welfare conditions, including but not limited to employee handbook and the provisions on relevant welfare policy, and strive to make more reasonable differentiation and interpretation.
Article 10 In the event that a worker dispatched by a labor-dispatching unit is injured in an incident while working for an employer, the labor-dispatching unit shall apply for determination of job injury according to law, and the employer shall assist in the investigation and verification for the purpose of determination of job injury. The labor-dispatching unit shall bear the liability for job injury insurance, but it may negotiate with the employer over the compensatory approach.
In the event that a dispatched worker applies for the diagnosis and assessment of occupational disease, the employer shall have the duty to deal with the matters relating to the diagnosis and assessment of occupational disease, and provide the materials such as the dispatched worker’s occupational history, history of exposure to the occupational disease and test results of hazardous factors at workplace for the occupational diseases that are necessary for the diagnosis and assessment of the occupational disease in a truthful manner, and the labor-dispatching unit shall provide the dispatched worker with other materials necessary for the diagnosis and assessment of occupational disease.
[Evolution of Provisions]

the Draft of the Provisions on Labor Dispatch of May 14, 2013

the Draft of Several Provisions on Labor Dispatch of August 7, 2013

Article 27 [Determination of Job Injury] In the event that a dispatched worker is injured in an incident while working for an employer, the labor-dispatching unit shall, as application subject, apply for determination of job injury and handle other matters, and the employer shall assist in the investigation and verification, bear the liability to pay compensation. The job injury will be counted in the employer’s incidence of job injury.

Article 19 [Determination of Job Injury] In the event that a dispatched worker is injured in an incident while working for an employer, the labor-dispatching unit shall, as application subject, apply for determination of job injury and handle other matters, and the employer shall assist in the investigation and verification, bear the liability to pay compensation.

[Lawyer Hong’s Interpretation]
The article indicates the liability of an employer in the determination process of job injury and occupational disease, and due to the separation of labor relation and employment relation in labor dispatch, job injury and occupational disease are more likely to occur in the employer’s workplace. The determination of job injury shall be based on labor relation, so the assistance of employer is important. Of course in the event the job injury is determined as liability of a labor-dispatching unit, the compensation shall be submitted in the labor-dispatching unit’s name.
However, the statement that the floating rate of job injury shall be borne by an employer in the draft was deleted. There is the same statement in the Implementation Procedures of Shanghai Municipality on the Industrial Injury Insurance (Revised). I gave a suggestion that since in practice some employers do not open accounts of social insurance, which means no employee having labor relation with it under its name, so the floating rate of job injury may be unable to be implemented, and finally still shall be undertaken by a labor-dispatching unit. So the Provisions have taken into consideration the obstacle that the subject that shall bear the floating rate of job injury may avoid implementation.
It shall be noted by an employer that, in the event a labor-dispatching unit does not pay social insurance (fail to pay, discontinue payment without authorization or entrust a third party to pay without authorization), the failure to compensate may occur, then the employer shall bear the joint liability. Therefore, the employer shall enhance the control of social insurance payment and specify the payment method and liability for breach of contract, in order to lower the risk for self to maximum. In the cases I dealt with, some well-known labor-dispatching units may pay less or skip payment. Although the final damage in on the interest of employee, the employer can not escape the legal liability.
Article 11 In the event that the administrative license of a labor-dispatching unit is not renewed upon expiry or its labor dispatch license is rescinded or revoked, the labor contract already concluded with its dispatched workers shall continue to be performed until expiration according to law. Both parties may dissolve the labor contract through negotiations.
[Evolution of Provisions]

the Draft of the Provisions on Labor Dispatch of May 14, 2013

the Draft of Several Provisions on Labor Dispatch of August 7, 2013

Article 50 [Continue to Perform] In the event that prior to promulgation of the revised Provisions the labor contract is concluded according to law and before the labor dispatch agreement expires, an employer shall not return a dispatched worker on the excuse of inconformity to temporary, auxiliary or alternative position, excessive proportion of labor dispatch or non-legal-qualification.

Article 39 [Continue to Perform] prior to implementation of the revised Provisions, the labor contract concluded according to law and the labor dispatch agreement in valid period shall be performed to the expiration date, and an employer shall not return a dispatched worker on the excuse of inconformity to temporary, auxiliary or alternative position, excessive proportion of labor dispatch or that the labor-dispatching unit does not get administrative permission. But if the labor contract and labor dispatch agreement are not in accordance with the equal pay for equal work stipulated in the revised Provisions, the contents shall be modified according to the revised Provisions.

[Lawyer Hong’s Interpretation]
The article stipulates how to perform and dissolve the labor contract under the situation that a labor-dispatching unit does not get the valid administrative permission. Since the administrative permission of labor-dispatching unit is a new content added in the Labor Contract Law and the legal provisions shall be received before July 1, 2014, in practice some labor-dispatching unit may not get administrative permission due to unqualified conditions or the existing license may be revoked.
For the requirements for establishing tripartite relation of labor dispatch, the labor-dispatching shall get administrative permission which is obviously a necessity, otherwise giving rise to the illegal dispatch. But the labor relation has the feature of actual performance, if the tripartite dispatch relation is denied only for deficient permission or even the labor contact may be cancelled, the contradiction may not be removed and on the contrary the job opportunity of worker may deprived of, since the employer can return the dispatched worker to the labor-dispatching unit on the excuse of non permission. The article actually suggests that if the administrative permission is deficient, tripartite dispatch relation can continue to the expiration date, in order to safeguard the stability of labor relation to maximum.
It should be noted by an employer that, this article does not stipulate how to handle the dispatch relation in the event of never getting administrative permission, and thus it may cause great disputes in practice (that is whether to continue perform or return and dismiss).According to the Measures for the Implementation of Administrative License for Labor Dispatch implemented in July 1, 2013, “the units providing labor dispatching service prior to the implementation of the measures shall operate new business after getting administrative permission according to the measures; the units without administrative permission of labor dispatch after the implementation of the measures shall not operate any new business.” It means that, in the event that an employer employs new dispatched worker since July 1, 2013 but a labor-dispatching unit does not get administrative permission, under this situation, how the employer and labor-dispatching unit bear the liability and how to handle the dispatch relation need further discussion. In order to control the risk, an employer shall ensure every new dispatched worker it employs is from the labor-dispatching unit with administrative permission, thus to lower the uncertain risk.
Article 12 Under any of the following circumstances, an employer may return a dispatched worker to the labor-dispatching unit concerned:
(1) The employer comes under the circumstances specified in Item 3, Article 40 and Article 41 of the Labor Contract Law;
(2) The employer is declared bankrupt, revoked of its business license, or ordered to close down or cancel registration according to law, or one decides to dissolve in advance or not to continue the business upon expiry of the business period; and
(3) The labor dispatch agreement is terminated upon expiry.
During the period of time when the dispatched worker has no job after being returned, the labor-dispatching unit shall pay remuneration to the dispatched worker on a monthly basis at least in accordance with the minimum wage rates set by local people’s government.
[Evolution of Provisions]

the Draft of the Provisions on Labor Dispatch of May 14, 2013

the Draft of Several Provisions on Labor Dispatch of August 7, 2013

Article 21 [Labor Contract Dissolution when Return] In the event that a dispatched worker is returned by an employer in accordance with Article 39 and Item 1, 2 of Article 40 of the Labor Contract Law, the labor-dispatching unit concerned may dissolve the labor contract with the dispatched worker according to the relevant provisions in the Labor Contract Law.

    Article 23 [Labor Contract Dissolution not Allowed when Return] Under any of the following circumstances, an employer can return a dispatched worker, and a labor-dispatching unit shall re-dispatch the worker.
(1) A dispatched worker is returned by an employer in accordance with Item 3, Article 40 and Article 41 of the Labor Contract Law;
(2) A dispatched worker is returned by an employer when an employer is declared bankrupt, revoked of its business license, or ordered to close down or cancel registration according to law, or decides to dissolve in advance or that the labor dispatch agreement expires according to law;
(3) The dispatched worker who is to be in the non-temporary, non-auxiliary and non-alternative position is returned by an employer or the dispatched worker in the excessive proportion is returned;
During the period of time when the dispatched worker has no job after being returned, the labor-dispatching unit shall pay remuneration to the dispatched worker on a monthly basis at least in accordance with the minimum wage rates set by local people’s government.

[Lawyer Hong’s Interpretation]
In this article, three circumstances that a dispatched worker can be returned are added on the basis of the original provisions, “objective condition is taken great change”, “the situation listed in economic cuts”, “disqualification of employer” and “labor dispatch agreement expires without renewal”.
From the point of clauses evolution, the Provisions seem to leave out the two circumstances that “the dispatched worker in non-temporary, non-auxiliary and non-alternative position and in excessive proportion of dispatch” can be returned. Some people take the above circumstances as “objective condition is taken great change” (changed situation caused by law adjustment), so an employer still can return the dispatched worker. In my opinion, whether “the dispatched worker in non-temporary, non-auxiliary and non-alternative position” and “the dispatched worker in excessive proportion of dispatch” can be returned involves how to regulate illegal dispatch and whether there are other better angles to comprehensively judge.
First, for “the dispatched worker in non-temporary, non-auxiliary and non-alternative position”, according to the Labor Contract Law the labor contract and labor dispatch agreement concluded before December 28, 2012 shall continue to be performed, so these dispatched workers can not be returned in spite of being in non-temporary, non-auxiliary and non-alternative position, and the law has provided the outlet of “continue to perform”. But for the dispatch occurring December 28, 2012, the auxiliary position can not be defined through democratic procedure, and then the employer shall make correction for existing illegal behavior. The punishment stipulated in the Labor Contract Law is to order to make corrections, and inflict fine for no correction within time limit. Thus “how to make correction”? There are two methods. One is that an employer and a dispatched worker conclude the labor contract to change to autonomous employment. However, this method shall be approved by the labor-dispatching unit and the worker, and so taking the will of the employer into consideration. If the labor-dispatching unit disagree dissolution, the worker disagrees to establish labor relation with the employer or the employer is not willing to establish a new labor relation, the above solution is infeasible. In other words, the autonomous employment should not be the only solution to “correction”; if autonomous employment is unavailable, the only correction method is to return the dispatched worker to the labor-dispatching unit which will re-dispatch the worker to other employer with qualified temporary, auxiliary and alternative position. The point is this circumstance is not specified in “the Provisions”. If we take it as “objective condition is taken great change”, how to define the “time point of this great change”, is it prior to order of correction or after that? The key is the explanation of the above matters and that how the enterprise handles it.
Second, for “the dispatched worker in excessive proportion of dispatch”, The current Labor Contract Law and “the Provisions” indicate that the dispatched employment prior to the promulgation of law shall continue to perform, while the dispatched employment after promulgation shall be considered with proportion limitation, but “the Provisions” attached 2-year transitional period. In other words, before March 1, 2016, the excessive proportion of employment is legal, and the labor contract and labor dispatch agreement shall continue to be performed, instead of “return”. Of course, in the 2-year transitional period the employer will not sit around, instead it shall provide “adjustment project” and report to the labor department for record. In other words, 2-year transitional period shall be understood as “2-year for correction”, and the employer shall completed the correction within 2 years. As for correction, it shall back to how to make corrections I mentioned before.
Chapter IV Dissolution and Termination of Labor Contract
Article 14 A dispatched worker may dissolve its labor contract with a labor-dispatching unit when noticing it 30 days in advance in written form. He/she may dissolve its labor contract with labor-dispatching unit 3 days ahead in written notice during the probation period. The labor-dispatching unit shall inform the employer concerned of the dispatched worker’s notice to dissolve the labor contract in a timely manner.
[Evolution of Provisions]

the Draft of the Provisions on Labor Dispatch of May 14, 2013

the Draft of Several Provisions on Labor Dispatch of August 7, 2013

Article 20 [A Dispatched Worker dissolves the Labor Contract] A dispatched worker can dissolve the labor contract with a labor-dispatching unit according to Article 36, 37 and 38 of the Labor Contract Law.

Article 24 [A Dispatched Worker dissolves the Labor Contract] A dispatched worker can dissolve the labor contract with a labor-dispatching unit according to Article 38 of the Labor Contract Law.
A dispatched worker may dissolve its labor contract with a labor-dispatching unit when noticing it 30 days in advance in written form. He/she may dissolve its labor contract with labor-dispatching unit 3 days ahead in written notice during the probation period.

[Lawyer Hong’s Interpretation]
The article specifies the conditions for and procedures of the performance of a dispatched worker’s “right to resign”. When resigning, a dispatched worker shall submit the resignation report to a labor-dispatching unit, and of course the main task is to hand over the work in the workplace, so in order to balance the interest of an employer, the labor-dispatching unit shall timely notify the employer. The article makes up the deficiency of the Labor Contract Law.
Of course, the fact I get to know is that the worker usually submits the resignation application to the employer, including but not limited to the written form or email. For the resignation report submitted by the worker to the employer, can it be taken as the legal procedures fir resignation and can the labor contract concluded between the worker and the labor-dispatching unit be dissolved? In my opinion, it should be solved combined with practice of dispatch employment. After the dispatched worker submits the resignation report to the employer, the employer has duty to inform the labor-dispatching unit timely and handle the relevant formalities for demission (which is also the effective method to control the risk), and shall not deny its effect only because the report is not submitted to the labor-dispatching unit.
Article 15 In the event that a dispatched worker is returned by an employer in accordance with Article 12 of the Provisions, the labor-dispatching unit concerned may dissolve the labor contract with the dispatched worker if the dispatched worker who is to be re-dispatched does not agree with the labor-dispatching unit to maintain or improve the conditions agreed upon in the labor contract.
In the event that a dispatched worker is returned by an employer in accordance with Article 12 of the Provisions, the labor-dispatching unit concerned may not dissolve the labor contract with the dispatched worker if the dispatched worker to be re-dispatched does not agree with the labor-dispatching unit to decrease the conditions specified in the labor contract except where the dispatched worker requests to dissolve the labor contract.
[Evolution of Provisions]

the Draft of the Provisions on Labor Dispatch of May 14, 2013

the Draft of Several Provisions on Labor Dispatch of August 7, 2013

Article 21 [Labor Contract Dissolution when Return] In the event that a dispatched worker is returned by an employer in accordance with Article 39 and Item 1, 2 of Article 40 of the Labor Contract Law, the labor-dispatching unit concerned may dissolve the labor contract with the dispatched worker according to the relevant provisions in the Labor Contract Law.
Article 22 [Circumstance that Labor Contract can not be Dissolved when Return] In the event that a dispatched worker is returned by An employer in accordance with Item 3, Article 40 and Article 41 of the Labor Contract Law, and when the employer is declared bankrupt, revoked of its business license, or ordered to close down or cancel registration according to law, or decides to dissolve in advance or not to continue the business upon expiry of the business period according to law and due to other reasons stipulated in the labor contract law, a labor-dispatching unit shall re-dispatch the worker.
Article 23 [Circumstance that Labor Contract is Dissolved for Disagreement in Alteration] In the event that the worker who is returned by an employer is re-dispatched to a new employer, and the original conditions in labor contract are changed, through the negotiation between the labor-dispatching unit and the dispatched worker but in vain, the labor contract can be dissolved.
In addition to that the conditions in the labor contract is remained or raised, and that the worker does not agree to be dispatch to the new employer, the labor-dispatching unit shall pay economic compensation according to law.

Article 25 [Circumstance that Labor-dispatching unit Dissolves Labor Contract] Through negotiation between a labor-dispatching unit and a dispatched worker, the labor contract can be dissolved.
In the event that a dispatched worker is returned by an employer in accordance with Article 39 and Item 1, 2 of Article 40 of the Labor Contract Law, the labor-dispatching unit concerned may dissolve the labor contract with the dispatched worker according to the relevant provisions in the Labor Contract Law.
Article 26 [Circumstance that Labor Contract is Dissolved for Disagreement in Alteration] In the event that a labor-dispatching unit remains or raises the conditions in the labor contract and dispatch the returned worker to a new employer, but the worker does not agree, the labor-dispatching unit can dissolve the labor contract. In the event the labor-dispatching unit lowers the conditions in the labor contract and dispatches the returned worker to a new employer, but the worker does not agree, the labor-dispatching shall not dissolve the labor contract.

[Lawyer Hong’s Interpretation]
This article continues from the proceeding paragraph, indicating the circumstance that “on the basis of being returned by en employer, a labor-dispatching unit can dissolve the labor contract”, that the labor-dispatching unit has duty to arrange “re-dispatch”, if the worker refuses the re-dispatch with the same conditions, the labor contract can be dissolved by the labor-dispatching unit. Compared with the draft (direct dissolution), this article impose the pressure on the labor-dispatching unit.
Of course in the re-dispatch, how can we correctly understand the “conditions in the labor contract”? Whether the “conditions” include “labor remuneration, job position and work place”? The “conditions in the labor contract” has been stated in Item 5, Article 46 of the Labor Contract Law, that “in addition to that an employer remains or raised the conditions in the labor contract to continue the contract, but the worker does not agree on it, the employer who terminated the labor contract for expiration of contract shall pay economic compensation”, but it this provision, the detailed contents of “conditions” are still not listed. In mu opinion, labor remuneration and job contents shall be understood as one of the “conditions”, that a labor-dispatching unit shall not change the labor remuneration and job contents (except raise labor remuneration). Of course for job content, it shall not strictly limit that all contents shall be same (actually even the same position in the different employer has different job contents), so we should consider combined with comprehensive aspects such as relevancy of job skill and workload. Actually, for the issues involving how a labor-dispatching unit and a worker negotiate the alternation in the labor contract, in practice, the judgment to remain only stays in the “preliminary stage of negotiation”. If dispute occurs in the negotiation, the court may only investigate from the “formal requirements” in advice on modifying the labor contract, and only investigate whether the name of job position is changed. We can predict the following circumstance that conditions are not changed, but the worker feels the great change in the condition after a period of practice, and at this time can the worker ask the labor-dispatching unit to change the conditions. It is a dual-standard issue involving contract alternation and actual performance.
The more realistic issue is that, whether the conditions in labor contract include “work place”. The workplace is usually changed since different employer, except the affiliated company. If the workplace is taken as conditions in the labor contract, the alternation by an employer will be all taken as “the original conditions are not remained”, so the above provisions will lose actual meaning. But if the “workplace” is excluded from the conditions in the labor contract, it seems that we fail to take the interest of a worker into consideration, and after all the commuter time and distance from home are important factors for the worker to choose job. In my opinion, the judicial department can introduce the principle of “actual adverse alternation”, that when the workplace is changed to exceed the affordable scope, which is taken as “the original conditions are not remained” (such as trans-regional and trans-provincial adjustment). If the workplace is changed within small range (such as two employers are in the same urban area) or the new employer supply the necessary assistance measures (such as shuttle bus), it shall be taken as “the original conditions in the labor contract is remained”, in order to balance the mutual interest of both parties.
Article 16 The labor contract between a labor-dispatching unit and a dispatched worker is terminated when the labor-dispatching unit is declared bankrupt, revoked of its business license, or ordered to close down or cancel registration according to law, or decides to dissolve in advance or not to continue the business upon expiry of the business period according to law. The employer concerned shall negotiate with the labor-dispatching unit over the proper placement of the dispatched worker.
[Evolution of Provisions]

the Draft of the Provisions on Labor Dispatch of May 14, 2013

the Draft of Several Provisions on Labor Dispatch of August 7, 2013

 

Article 27 [Properly Relocate Dispatched Worker When Labor Contract Terminates]  In the event that a labor-dispatching unit is declared bankrupt, revoked of its business license, or ordered to close down or cancel registration according to law, after proper relocation of the dispatched workers through negotiation with an employer, the original labor contract can be terminated.

[Lawyer Hong’s Interpretation]
The article specifies the circumstance that the labor contract is terminated due to the disqualification of labor service unit, but it also specifies that an employer has duty to properly settle the workers down. Compared with the draft, the formal one does not take “proper relocation of the worker” as the precondition of labor contract termination.
In my opinion, whether the “proper relocation” mentioned here contains the meaning of that “an employer can return” is worth thinking. If a labor-dispatching unit starts the procedure of labor contract termination, an employer will not be willing to change to autonomous employment, so the only feasible solution is to “return” and ensure the payment of economic compensation. If an employer continues to employ after a labor-dispatching unit terminates labor contract, the new real labor relation is established.
Therefore, since the duty set in the “proper relocation through negotiation” is not clear, an employer can still assist a labor-dispatching unit to terminate the labor contract, and bear the joint liability to pay economic compensation according to the Labor Contract Law, and the conclusion of “the employer shall ensure the employment of the worker” can not be made.
Article 17 In the event that a labor-dispatching unit dissolves or terminates its labor contract with a dispatched worker pursuant to Article 46 of the Labor Contract Law or Article 15, 16 of the Provisions, it shall provide the dispatched worker with economic compensation.
[Evolution of Provisions]

the Draft of the Provisions on Labor Dispatch of May 14, 2013

the Draft of Several Provisions on Labor Dispatch of August 7, 2013

Article 23 [Circumstance that Labor Contract is Dissolved when Disagreement in Alteration] In the event that the worker who is returned by an employer is re-dispatched to a new employer, and the original conditions in labor contract are changed, through the negotiation between the labor-dispatching unit and the dispatched worker but in vain, the labor contract can be dissolved.
In addition to that the conditions in the labor contract is remained or raised, and that the worker does not agree to be dispatch to the new employer, the labor-dispatching unit shall pay economic compensation according to law.
Article 24 [Economic Compensation] In the event that a labor-dispatching unit or a dispatched worker dissolves and terminates the labor contract according to law, the economic compensation shall be in accordance with Article 46, 47 and 97 of the Labor Contract Law.

Article 28 [Economic Compensation] Under any of the following circumstances, a labor-dispatching unit shall pay a dispatched worker economic compensation:
(1) A dispatched worker dissolves the labor contract in accordance with Paragraph 1, Article 24 of the Provisions;
(1) A labor-dispatching unit dissolves the labor contract in accordance with Article 25 and 26 of the Provisions;
(3) A labor-dispatching unit terminates the labor contract in accordance with Article 27 of the Provisions.
Economic compensation shall be implemented in accordance with Article 46, 47 and 97 of the Labor Contract Law.

[Lawyer Hong’s Interpretation]
The article, combined with the newly added circumstance for return in labor dispatch, develops the provisions on the payment of economic compensation after contract dissolution and termination
It should be noted that, according to Article 16 of the Provisions (legal termination stipulated in the Labor Contract Law), when the labor contract is terminated, the economic compensation shall be paid according to the worker’s service year, and a labor-dispatching unit does not have duty to inform 30 days in advance or pay extra one-month remuneration.In the event that a labor-dispatching unit dissolves the labor contract in accordance with Article 15 of the Provisions, it seems better to refer to Item 3, Article 40 of the Labor Contract Law that the objective conditions are taken great changes and alternation of the labor contract can not be agreed through negotiation with the worker, an employer shall inform the worker in the written 30 days in advance or pay extra one-month remuneration after termination of the labor contract. Thus, the labor-dispatching unit still may need to pay the payment in lieu of notice. Some people suggest, the Article 15 of the Provisions creates a “circumstance for dissolving the labor contract” for a dispatched worker, and a labor-dispatching unit pays the economic compensation according to this article, no need to inform 30 days in advance or pay extra one-month remuneration.
In my opinion, although the dissolution of the labor contract for a dispatched worker has specificity, on the basis of the fundamental principle of “legal conditions for dismiss” set in the Labor Contract Law, it is impropriate to consider that the provisions can break through the provisions of the Labor Contract Law to create a new circumstance for dissolution, after all the lower-level law can not violate the provisions of the higher-level law. Therefore, the economic compensation stated in this article can not exempt a labor-dispatched unit from the legal liability to inform 30 days in advance or pay extra one-month remuneration.
Chapter V Social insurance in Trans-regional Labor Dispatch
Article 18 In the event that a labor-dispatching unit in a region dispatches a worker to another region, it shall obtain the social insurance coverage for the dispatched worker at the place where the employer concerned is located, and pay the social insurance premium in accordance with the rules at the place where the employer concerned is located, and the dispatched worker is entitled to the social insurance benefits in accordance with the provisions of the State.
[Evolution of Provisions]

the Draft of the Provisions on Labor Dispatch of May 14, 2013

the Draft of Several Provisions on Labor Dispatch of August 7, 2013

Article 25 [Trans-regional Dispatch Benefits] For trans-regional labor dispatch, the labor remuneration, labor conditions and social insurance enjoyed by a dispatched worker shall be in accordance with the local standard where the employer is located. In the event that the relevant standard where the labor-dispatching unit is located is higher than the relevant standard in the employer’s location, and the labor-dispatching unit and the dispatched worker come to agreement to implement the relevant regulations in the labor-dispatching unit’s location, which shall be followed.

Article 29 [Standard of Trans-regional Dispatch Benefits] For trans-regional labor dispatch, the labor remuneration, labor conditions and social insurance enjoyed by a dispatched worker shall be in accordance with the local standard where the employer is located. In the event that the relevant standard where the labor-dispatching unit is located is higher than the relevant standard in the employer’s location, and the labor-dispatching unit and the dispatched worker come to agreement to implement the relevant regulations in the labor-dispatching unit’s location, which shall be followed.

[Lawyer Hong’s Interpretation]
Since Article 62 of the Labor Contract Law specifies the employment form of trans-regional dispatch, it does not violate the legal regulations that a dispatched worker is dispatched by a labor-dispatching unit in other place to an employer in local area. The major problem for current trans-regional dispatch is that an employer, for the purpose of lowering the cost of employment, takes the advantage of different premium of social insurance in different regions to find a “low-lying land” that the employer in economically developed region cooperates with the labor-dispatching unit in less developed area, and establish the labor contract and social insurance relation in the less developed region, but the employment is used in the developed regions. This behavior is legal, but the interest of the worker such as job injury insurance, medical insurance and pension insurance will be impacted at different levels, and finally leading to the adverse situation of “payment in other place and contradiction in this city”. On this issue, I have advised many times that the core contradiction of the labor dispatch lays on it, and it is necessary to accelerate the solution.
This article, responding to the above urging issue, specified that the trans-regional dispatch shall cover the worker's social insurance in the employer’s location, which has very significant realistic meaning. In fact, there is a period to update the understanding of regulations on trans-regional dispatch. The Article 18 of the Measures for Administration of Labor Dispatch Administrative Licenses (Draft for Comments) specified that, “(branch and license filing) the labor-dispatching unit operating the dispatch business for other provinces, autonomous regions and municipalities directly under the central government shall establish the branches”. This regulation ensures the subject for covering insurance in the place the employer is located, finally combine the labor contract and social insurance, and govern the “improper behavior” of trans-regional dispatch. However, the Measures for the Implementation of Administrative License for Labor Dispatch formally promulgated leaves out the above statements, leading to that the objective of governing by dispatch subject comes to nothing. The legislation of the Provisions on Labor Dispatch brings this issue again, and through modifications the governing method is finally determined to "changing the insured subject". However, this special system design (still benefit for worker) may face the strong challenges from the current system design, mainly in:
1. The Social Insurance Law specifies the principle of dependency administration for social insurance registration that an employer shall carry out the initial registration of social insurance in the location of business registration, and shall register the social insurance and pay the premium for the new employed worker within 30 days. It means that it is naturally legal for a labor-dispatching unit, as a legal employer, to pay the social insurance in the region where the labor-dispatching unit is located. If a labor-dispatching unit has covered the insurance for a dispatched worker, but violates the operation said in this article, how can we govern it? If we take it as administrative punishment, what is the legal basis? Presumably, the labor administrative department has no idea to solve the administrative lawsuit, and finally the supervision is weakened, without solution.
2. We can not avoid the circumstance that a dispatched worker does not pay premium. If job injury occurs, it shall be borne by the labor-dispatching unit, and the social insurance benefit shall be in accordance with the standard of the labor-dispatching unit’s location, and the labor-dispatching unit and the employer shall bear the joint liability. If based on this article, the coverage of social insurance shall be in the employer’s location, so the job injury insurance shall be according to the standards of the employer's location. The contradiction between them will certainly involve the conflict of right of jurisdiction, and actually the right of jurisdiction on job injury determination differs in different places, some in production and operation location or some in registration location. This article will certainly intensify the disputes and contradictions caused by the right of jurisdiction.
3. We also take notice that there are cases of trans-regional dispatch from developed area to less developed area, and if the coverage of insurance is forced to be registered in the employer’s location, it may be unfavorable to the worker, especially the one whose place of domicile is in the labor-dispatching unit’s location. Based on the spirit of “giving priority to performance place and registering in the place with higher conditions” stipulated in Article 14 of the Regulation on the Implementation of the Employment Contract Law, shall it according to the more beneficial factors give the worker corresponding right of choice (the second draft mentions that if the registration location is better than performance location, it can be implemented according to the standard of registration location through agreement)? If the system arrangement unfavorable to the worker is made, does it violate the spirit of protecting the interest of worker in the Labor Contract Law?
Therefore, there are some contradictions between the above new breakthrough as well as the current Social Insurance Law and some existing system designs in the Regulations on Job Injury Insurance. In order to gets benefits for he dispatched worker, we shall make further breakthrough in the higher-level law.
Article 19 In the event that a labor-dispatching unit dispatching a worker to an employer has set up a branch at the place where the employer is located, the branch shall complete the formalities for obtaining social insurance coverage and pay the social insurance premium for the dispatched worker.
In the event that a labor-dispatching unit dispatching a worker to an employer does not set up a branch at the place where the employer is located, the employer shall complete the formalities for obtaining social insurance coverage and pay the social insurance premium for the dispatched worker on behalf of the labor-dispatching unit.
[Evolution of Provisions]

the Draft of the Provisions on Labor Dispatch of May 14, 2013

the Draft of Several Provisions on Labor Dispatch of August 7, 2013

    Article 26 [Trans-regional Social Insurance Payment] For the worker dispatched to other place, a labor-dispatching unit shall establish the branch according to the Measures for the Administration of Administrative License for Labor Dispatch, and the branch will handle the formalities for social insurance coverage for the dispatched worker, pay the premium of pension, medical, unemployment, job injury and maternity insurance.
For the worker dispatched to other place, a labor-dispatching unit shall not entrust other units to pay the social insurance premium for a dispatched worker.

Article 30 [Trans-regional Social Insurance Payment] In the event that a labor-dispatching unit established branch or subsidiary, the branch or subsidiary shall handle the formalities of social insurance coverage for the dispatched worker, and pay  the premium of pension, medical, unemployment, job injury and maternity insurance.
In the event that a labor-dispatching unit does not establish branch or subsidiary, a labor-dispatching unit shall handle the formalities of social insurance coverage for the dispatched worker according to law, and pay the premium of pension, medical, unemployment, job injury and maternity insurance.
For the worker dispatched to other place, a labor-dispatching unit shall not entrust other units to pay the social insurance premium for a dispatched worker.

[Lawyer Hong’s Interpretation]
This article continues from the proceeding paragraph, specifying how an employer pays the social insurance in its location. Compared with the draft, the major change is that in the event a labor-dispatching unit does not establish any branch in the employer’s location, the employer shall pay the social insurance by itself. In detailed statement, in the event that a labor-dispatching unit established a branch in an employer's location, it seems more appropriate for the branch to cover the social insurance. But the cases I dealt with include two situations that the branch of a labor-dispatching unit concludes the labor contract with a worker or directly concludes the labor contract with a labor-dispatching unit. In former one, the labor contract subject and registration subject of social insurance are consistent. There is no claim obstacle in the social insurance benefits, but I may be inconsistent with the subject of the labor dispatch agreement, that is A and B conclude the dispatch agreement, but A1 and the worker conclude the labor contract, and A1 shall also pay the social insurance; in latter one, the labor dispatch agreement and the labor contract are in A, but the branch is A1, so according to this article, A1 registers the social insurance. Thus the labor contract and registration subject for social insurance are separated, so how to claim the job injury benefits (job injury confirmation is for A, but A1 shall pay the charge), which needs the further solution by the Ministry of Human Resources and Social Security.
If a labor-dispatching unit does not establish any branch, an employer shall handle the registration of social insurance by itself. The legality and operability, as I mentioned in the proceeding paragraph, may face great challenges. For this, the Notice of Doing well the Implementation of the Interim Provisions on Labor Dispatch (Order (2014) No.13 of the Ministry of Human Resources and Social Security) promulgated by the Ministry of Human Resources and Social Security specifies, “social insurance agency shall research and formulate the corresponding solution, to provide the convenient channel for an employer to handle the formalities for the worker's social insurance coverage substituting for a labor-dispatching unit, and provide the specific service. In the event that the social insurance is registered in the labor-dispatching unit’s location or is entrusted other units in the employer’s location to handle, the labor-dispatching unit shall handle the handover well of entrustment through negotiation with the employer, and the social insurance agency shall de well the insurance connection and rights and interest record for the dispatched worker. The corresponding social insurance benefit shall be paid according to the Provision to ensure the implementation of the worker’s rights and interest of social insurance.” It fully indicates the Ministry of Human Recourses and Social Security has noted the matters and challenges brought by this breakthrough operation. If a labor-dispatching unit refuses to handle the transfer and connection of social insurance, how to govern and punish it will became a challenge faced by the administrative department.
Chapter VI Legal Liability
Article 20 Any violation of the provisions of the Labor Contract Law and its Implementation Regulations concerning labor dispatch by a labor-dispatching unit or an employer shall be dealt with in accordance with Article 92 of the Labor Contract Law.
[Evolution of Provisions]

the Draft of the Provisions on Labor Dispatch of May 14, 2013

the Draft of Several Provisions on Labor Dispatch of August 7, 2013

    Article 46 [Fine] In the event that a labor-dispatching unit violates the Labor Contract law to operate the labor dispatch business without authorization, it shall be order to stop the illegal act, and the illegal gains shall be confiscated, the fine of not less than one time but not more than five times of the illegal gains shall be imposed; in the event of confiscation of illegal gains, the fine could be less than 50 thousand.
a labor-dispatching unit or an employer who violates the provisions on labor dispatch in the Labor Dispatch Law shall be ordered to make corrections by the human resources and social security department within the time limit; if the correction is not made within the time limit, the fine of not less than 5 thousand but not more than 10 thousand per person shall be imposed, and the labor dispatch license of a labor-dispatching unit shall be revoked.
Article 47 [Taken as Labor Relation Establishment with Dispatched Worker] In the event that an employer who violates the labor dispatch provisions of the Labor Contact Law on temporary, alternative and auxiliary position and employment proportion does not make correction within the time limit, and it still does not make correction after fine, the dispatched worker in temporary, alternative and auxiliary position and in excessive employment proportion will be taken as establishing labor relation with the employer, and the starting time of the labor contract shall be as of the date of start to use the worker.

    Article 36 [Fine] A labor-dispatching unit or an employer who violates the provisions on labor dispatch in the Labor Dispatch Law shall be ordered to make corrections by the human resources and social security administrative department within the time limit; if the correction is not made within the time limit, the fine of not less than 5 thousand but not more than 10 thousand per person shall be imposed, and the labor dispatch license of a labor-dispatching unit shall be revoked.
Article 37 [Taken as Labor Relation Establishment with Dispatched Worker] In the event that an employer who violates the labor dispatch provisions of the Labor Contact Law on temporary, alternative and auxiliary position and employment proportion does not make correction 1 month after fine according to Paragraph 2, Article 92 of the Labor Contract Law, the dispatched worker in temporary, alternative and auxiliary position and in excessive employment proportion shall be taken as establishing labor relation with the employer, and the employer shall conclude the labor contract timely, and the starting time of the labor contract shall be as of the date of the second day of 1 month after fine, except that the dispatched worker dose not agree to establish the labor relation with the employer in the written form.

[Lawyer Hong’s Interpretation]
Compared with the draft, the largest change in this article is the deletion of the legal liability of “being taken as establishing labor relation”. When the Ministry of Human Resources and Social Security promulgated the draft, I have written a article to suggest its deletion, for the labor relation has the feature of actual performance and the will of party concerned shall be respected, and the labor relation shall not be mandatorily confirmed. My suggestion is finally adopted, and it is quite beneficial to the employer in a way.
According to Article 92 of the Labor Contract Law, “a labor-dispatching unit or an employer who violates the provisions on labor dispatch shall be ordered to make corrections by the labor administrative department within the time limit; if the correction is not made within the time limit, the fine of not less than 5 thousand but not more than 10 thousand per person shall be imposed, and the labor dispatch license of a labor-dispatching unit shall be revoked. In the event that an employer causes the damage on a dispatched worker, a labor-dispatching unit and an employer shall bear the joint liability for compensation.” The “violating the provisions on labor dispatch” in the proceeding paragraph shall be understood as all the illegal acts of labor dispatch including “non-temporary, non-alternative and non-auxiliary labor dispatch” and “labor dispatch of excessive proportion”. It means that for the above illegal acts, an employer may be ordered to make correction within the time limit, and if correction is not made within the time limit it shall bear the liability of fine. If it causes economic damage on the worker, the liability of compensation shall be borne.
Article 21 In the event that a labor-dispatching unit dissolves or terminates a labor contract with a dispatched worker in violation of the Provisions, the case shall be subject to Article 48 and Article 87 of the Labor Contract Law.
[Evolution of Provisions]

the Draft of the Provisions on Labor Dispatch of May 14, 2013

the Draft of Several Provisions on Labor Dispatch of August 7, 2013

Article 44 [Illegal Dissolution and Termination] In the event that a labor-dispatching unit dissolves or terminates a labor contract with a dispatched worker in violation of the Provisions, the case shall be subject to Article 48 and Article 87 of the Labor Contract Law.

Article 34 [Illegal Dissolution and Termination] In the event that a labor-dispatching unit dissolves or terminates a labor contract with a dispatched worker in violation of the Provisions, the case shall be subject to Article 48 and Article 87 of the Labor Contract Law.

[Lawyer Hong’s Interpretation]
The article reiterates the liability a labor-dispatching unit shall bear for illegal dissolution of the labor contract. It shall be noted that, according to Article 48 of the Labor Contract Law, “in the event that an employer violates the provision of this article to dissolve or terminate the labor contract, and a worker asks to continue performance of the labor contract, the employer shall continue performance”. In other words, the dispatched worker still insists on the labor relation recovery.
Of course in the cases about dispatch disputes I dealt with, when a worker appeals to recover the labor relation with a labor-dispatching unit, he/she also ask the employer to recover the position and benefits. For this, the employer usually demurs that it does not have labor relation with the dispatched worker and shall not bear the liability for employment recovery; while the labor-dispatching unit demurs that since the labor relation is based on the position provided by the employer, by now the labor relation can not be actually recovered after return. Some courts also accept the above demurrer, saying that the tripartite dispatch relation can not be recovered, and judging to pay the compensation for illegal dissolution of the labor contract. Some courts support to recover the labor relation, but not to recover the position and benefits, and the benefits shall be paid according to the minimum remuneration during the labor relation recovery. In my opinion, the different acts taken in judicial practice fully reflect the lack of detailed provisions in the Labor Contract Law on the liability of illegal dismiss of the dispatched worker (especially the liability of the employer).
Article 22 In the event that an employer violates Paragraph 3, Article 3 of the Provisions, the competent department in charge of human resources and social security shall order it to make corrections and give it a warning; in the event of any damage caused to the dispatched worker concerned, the employer shall be liable to make compensation according to law.
[Evolution of Provisions]: Newly added
[Lawyer Hong’s Interpretation]
This article is actually aimed at the administrative punishment for an employer who does not establish the auxiliary position according to democratic procedure. But from individual cases settlement, there is no response to that “whether the dispatch in lack of democratic procedure pertains to illegal dispatch”. If it is only determined as administrative liability, an employer may probably rush into danger, with the mind of “Let's put the matter aside for the time being”, since after all there is a opportunity to “make correction”.
Article 23 Any violation of Article 6 of the Provisions by a labor-dispatching unit shall be dealt with in accordance with Article 83 of the Labor Contract Law.
[Evolution of Provisions]: Newly added
[Lawyer Hong’s Interpretation]
According to Article 83 of the Labor Contract Law, in the event an employer violates the Provisions to appoint the probation period with a worker, it shall be ordered to make correction by the labor administrative department; in the event that the probation period has been performed, the employer shall, based on the standard of remuneration after probation, pay the compensation to the worker for the excessive period of legal probation that has been performed. This article specifies that, in the event that a labor-dispatching unit appoints the probation for second time, the compensation shall be paid to the worker for violation of law.
Article 24 In the event that an employer returns a dispatched worker in violation of the Provisions, the case shall be subject to Paragraph 2, Article 92 of the Labor Contract Law.
[Evolution of Provisions]: Newly added
[Lawyer Hong’s Interpretation]
This article actually denies the “appointing conditions for return”. It limit the conditions for return in the “legal scope” to limit the employer's right to randomly return at the maximum. But how to call to account when random return occurs, there is no substantive breakthrough in the Labor Contract Law and the Provisions. This will lead to the inevitable existence of random return.
Chapter VII Supplementary Provisions
Article 25 The employ of dispatched workers by the permanent representative office of a foreign enterprise or by the representative office of a foreign financial institution in China as well as the employ of international oceangoing seamen by a seamen employer in the form of labor dispatch is exempted from the restrictions on the proportion of dispatched workers employed for temporary, auxiliary or alternative job positions.

[Evolution of Provisions]

the Draft of the Provisions on Labor Dispatch of May 14, 2013

the Draft of Several Provisions on Labor Dispatch of August 7, 2013

Article 10 [Circumstance without Constraint of Temporary, Alternative and Auxiliary Position] The dispatched worker employed by the organizations such as foreign diplomatic representative offices located in China, representative offices of the United Nations system organizations, representatives of foreign news agencies, resident offices of foreign enterprises and resident representative offices of financial institutions do not have constraint on temporary, alternative and auxiliary position and employment proportion.

Article 6 [Circumstance without Constraint of Temporary, Alternative and Auxiliary Position] The dispatched worker employed by the organizations such as foreign diplomatic representative offices located in China, representative offices of the United Nations system organizations, representatives of foreign news agencies, resident offices of foreign enterprises and resident representative offices of financial institutions do not have constraint on temporary, alternative and auxiliary position and employment proportion.

[Lawyer Hong’s Interpretation]
The article specifies the excepted circumstance of temporary, alternative and auxiliary position and employment proportion, mainly aimed at the dispatch employment used by representative organizations without employment subject qualification. Since the representative only can use dispatch employ, but can not directly establish labor relation with the worker, so there is no operability for implementing “temporary, alternative and auxiliary position” and “employment proportion”.
However, for a representative organization, the other contents in the Provisions shall still be strictly followed, including but not limited to:
(1) The labor dispatch agreement specifies the legitimate essential clauses;
(2) Implement the strictly conditions for return;
(3) Pay economic compensation according to law, and properly relocate the dispatched worker;
In the disputes of the representative offices I dealt with, there are not a few circumstances involving recovering labor relation and direct employment and even the circumstances that a worker works in both the representative office and entity unit. The above disputes can not be settled down due to the laggardness of legislation on the employment of representative office.
Article 26 Labor dispatch as referred to herein do not include the dispatch of employees of an employer to overseas areas for work or to a family or natural person to provide labor service.
[Evolution of Provisions]

the Draft of the Provisions on Labor Dispatch of May 14, 2013

the Draft of Several Provisions on Labor Dispatch of August 7, 2013

    Article 6 [Circumstance not Pertaining to Labor Dispatch] Any of the following circumstances does not pertain to the labor dispatch mentioned in the Provisions:
(1) An employer temporarily transfers its employee to other affiliated employer;
(2) An employer dispatches its employee to overseas area to provide labor;
(3) An employer dispatches its employee to family or natural person to provide labor.

    Article 38 [Circumstance not Pertaining to Labor Dispatch] Any of the following circumstances does not pertain to the labor dispatch mentioned in the Provisions:
(1) An employer dispatches its employee to the higher-level unit or affiliated unit to provide labor in the form of organization and appointment;
(2) An employer dispatches its employee to overseas area to provide labor;
(3) An employer dispatches its employee to family or natural person to provide labor;

[Lawyer Hong’s Interpretation]
The article specifies the “dispatch circumstances” of non-labor dispatch that the employee dispatched to overseas area, family or natural person to provide labor shall not be subjected to this article.
Compared with the draft, the formal provisions do not leave out the employment method of appointment and temporary transfer for affiliated enterprises. I speculate that the employment method of appointment and temporary transfer prevails between affiliated enterprises, but it lacks clear legal definition. In dealing with practice, according to my experience, the appointment and temporary transfer between affiliated enterprises lead to the separation between labor relation subject and performance subject of the labor contract, similar to labor dispatch. But the difference is that appointment and temporary transfer are not operation acts, so the separation is still legal and valid, and the judicial organ will generally not govern it as “labor dispatch”.
Article 27 The employ of workers by an employer in the form of labor dispatch in the name of contracting and outsourcing shall be dealt with in accordance with the Provisions.
[Evolution of Provisions]

the Draft of the Provisions on Labor Dispatch of May 14, 2013

the Draft of Several Provisions on Labor Dispatch of August 7, 2013

Article 5 [Regulating Labor Dispatch in Disguise of Outsourcing] In the event that an employer outsource the business to other employer but the worker from contractor unit uses the production facilities in the employer’s production and operation location, and the labor process is under the direction, supervision and management of the employer, it is labor dispatch employment.

    Artcile2 [Definition] The labor dispatch mentioned in the Provisions refers to an employment method that an employer dispatches the worker it employed to other employer in the form of operation, and the latter employer directly manage the labor process of the worker.
In the event that an employer outsources the business to the contractor unit but directly manage the labor process of the worker in the contractor unit, it is labor dispatch employment.

[Lawyer Hong’s Interpretation]
The article aims at governing the acts of “Regulating Labor Dispatch in Disguise of Outsourcing” according to the Provision. After the Labor Contract Law is revised, many enterprises starts to resort to labor outsourcing, business outsourcing and hiring work for processing to replace the labor dispatch, in order to govern the strict limitation of labor dispatch. There are not a few “fake Outsource” which is a change in form but not in content.
Since the hiring work is an operation form which is beyond the scope of employment in essence. But considering the dispatch in the name of hiring work has strong disguise, and the interest of the worker is always damaged, so this legislation to govern is reasonable. The key point is that how to differentiate the labor dispatch and civil hiring work. From the point of clauses evolution, the first draft highlights the recognition factors such as "workplace, production facilities as well as direction, supervision and management", while the second draft only remains the recognition factor of “directly managing the labor process”, but the formal provision leaves out the above statements. It can be predicted that, the differentiation between dispatch and outsource can not be made through one or two recognition factors. Once the disputes occur, it may be handed to judgment organs to be judged by right of discretion according to all-round factors. This is why the formal provisions state it ambiguously.
I have suggested to modify the second draft as follows, “[Suggestion for Modification] The labor dispatch mentioned in Article2 of the Provisions refers to an employment method that a labor-dispatching unit dispatches the worker it employed to other employer in the form of operation, and the latter employer directly manage the labor process of the worker.”
In the event that an employer outsources the business to a contractor unit, the labor dispatch employment can be determined according to the following circumstances.
(1) A contractor unit does not have the relevant operation qualification;
(2) A worker from a contractor unit uses the employer’s production facilities in the employer’s production location;
(3) The labor process of a worker from a contractor unit is mainly directed, supervised and managed by an employer;
(4) An employer bears the work consequence and risk of a worker from a contractor unit;
(5) The circumstances of other acts in fraud of law, rules and regulations.
In my opinion, although the recognition factors in the Provisions are not obvious, the judgment organ, to a large extent, are likely to analyze and judge from the aspects such as “operation qualification in industrial and commercial registration”, “accounting and tax treatment of outsource charge”, “process of labor management and control” and “worker’s work consequence ascription and risk taking”.
Article 28 In the event that the number of dispatched workers employed by an employer exceeded 10% of the total number of its employment prior to the effective date of the Provisions, the employer shall develop a scheme for employment adjustments, and reduce the proportion to the specified level within 2 years from the effective date of the Provisions. However, the labor contracts concluded according to law prior to the release of the Decision of the Standing Committee of the National People’s Congress on Amending the Labor Contract Law of the People’s Republic of China and the labor dispatch agreements whose expiry date is in 2 years from the effective date of the Provisions may continue to be performed until expiry according to law.
The employer shall file for record the scheme for employment adjustments it develops with the local competent administrative department in charge of human resources and social security.
The employer shall not employ new dispatched workers before reducing the number of dispatched workers prior to the effective date of the Provisions to the specified proportion as required.
[Evolution of Provisions]

the Draft of the Provisions on Labor Dispatch of May 14, 2013

the Draft of Several Provisions on Labor Dispatch of August 7, 2013

    Article 52 [Settlement for Excessive Employment Proportion in Transitional Period] According to the labor contract and the labor dispatch agreement formulated before the Decision is promulgated, the labor dispatch employment in the non-auxiliary position shall not be counted into the employment proportion.
In the event that the dispatched worker employed by an employer exceeds the stipulated proportion according to the labor contract and the labor dispatch agreement formulated before the Decision is promulgated, the employer shall report to the local human resources and social security department. After being examined and approved, it shall lower the proportion to the legal proportion within 2 years since the Provision is promulgated.

    Article 39 [Continue Performance] The labor contract and the labor dispatch agreement formulated before the Decision is promulgated shall be performed to the date of expiry, and an employer shall not return a dispatched worker on the excuse of inconformity to temporary, auxiliary or alternative position, excessive proportion of labor dispatch or non-legal-qualification. But in the event that the contents in the labor contract and labor dispatch agreement are not in accordance with the provisions on equal pay for equal work in the revised decision, they shall be adjusted according to the revised decision.
In the event that the number of dispatched workers employed by an employer except for the workers in temporary and alternative position has exceeded the stipulated proportion before the revised decision is promulgated, before the stipulated proportion is reached, the employer shall not employ any new dispatched worker in the auxiliary position.

[Lawyer Hong’s Interpretation]
The article specifies the transitional period for adjusting dispatch proportion.
In the evolution of the clauses, the final provisions finally adopts the provisions in the first draft that an employer is allowed to gradually make correction to lower the proportion to the legal proportion 10% within 2 years, in order to alleviate the contradiction between labor and capital at the maximum and avoid the large-scale return of dispatched worker, and also to protect the employer's need for normal production and operation. But the changes in the formal provisions is that the original “being examined and approved by the local human resources and social security department” is transferred to “being recorded in local human resources and social security department”. In other words, the human resources and social security department will not interfere in the adjustment of an employer, and an employer only need to record the procedures and lower the proportion to the stipulated level within 2 years.
On the basis of understanding the original meaning, an employer shall pay attention to the following matters:
1. During the 2-year transitional period, an employer bears legal risk if returning a dispatched worker for the reason of excessive proportion;
2. The workers dispatched before December 28, 2012 are not subjected to the limitation of 2-year transitional period, and can continue to be performed to the date of expiry;
3. Before the proportion meets the stipulated level, no new dispatched worker can be employed.
In addition, we may have the following questions. If an employer does not record, how the excessive proportion can be governed? How to govern? Does it bear administrative punishment or be regarded as direct employment? The Provisions do not specify the specific regulations.An employer shall understand the latest dynamics of law enforcement timely to lower the legal risk for non-recording.
Article 29 The Provisions shall become effective as of March 1, 2014.
[Lawyer Hong’s Interpretation]
The article specifies the implementation time. What an employer is concerned about is the retroactive effect. If a worker is returned before May 1, 2014, is the dispatch subjected to the Provisions? Or if a dispute occurs after May 1, 2014, how can we handle according to the Provisions?
In my opinion, the "law of non- retroactivity" is the basic principle, and for the setting of newly added rights and obligations, form the point of stable labor relation, the return and labor dispatch occurred before May 1, 2014 are not subjected to the newly added clauses. By the original contents stipulated in the Labor Contract Law shall be still followed, such as the provisions on equal pay for equal work. Due to the complexity of dispute types of labor dispatch, we shall judge it according to the factors such as the legislative intention, updated rules and regulations and interest balance, and an employer shall prepare well the implementation of rules and regulations in advance.