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China – The Decision Of The Standing Committee Of The National People’s Congress On Revising The Labour Contract Law Released.

2 March, 2013

 

Legal News & Analysis – Asia Pacific – China – Labour & Employment

 

On December 28, 2012, the Standing Committee of the National People's Congress released the Decision on Amending the Labor Contract Law of the People's Republic of China (the "Amendments"), which will be implemented from July 1, 2013. The Amendments primarily modify the labor dispatch regime by: 1) specifying higher and more onerous requirements for conducting labor dispatch business to raise the threshold for market entry, for example, registered capital being no less than RMB 2,000,000; 2) requiring that a company obtain an administrative license with the labor department before it can conduct labor dispatch business and process such company registration; 3) specifying that a unit to which a worker is dispatched ("Receiving Unit") shall apply the same compensation distribution method for dispatched employees and regular employees in similar positions and that the compensation for a dispatched employee as specified or agreed upon in the relevant contracts should be consistent with the stipulations relating to "equal pay for equal work"; 4) emphasizing that labor dispatch "can only" be used for temporary, ancillary or alternative positions, and specifying the definitions of "temporary positions", "ancillary positions" and "alternative positions"; and 5) imposing more severe penalties to labor dispatch service providers or Receiving Units in violation of the stipulations.

 

After issuance and implementation of the Amendments, labor dispatch service providers and Receiving Units should revise the labor contracts and labor dispatch agreements entered into before issuance of the Amendments accordingly if they do not comply with the stipulations in the Amendments relating to "equal pay for equal work". A company which currently conducts a labor dispatch business and desires to continue conducting such business must obtain the administrative license and complete company alteration registration within a year from the date of implementation of the Amendments.

 

The full Chinese text of the Amendments is available here.

 

 
For further information, please contact:
 
Elizabeth Cole, Partner, Orrick

ecole@orrick.com 

 

Seung Chong, Partner, Orrick
schong@orrick.com
 

Veronica Lockyer, Orrick
vlockyer@orrick.com
 

Yan Zeng, Orrick
yzeng@orrick.com

 

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