31 July, 2012

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

On July 6, 2012, Standing Committee of the National People’s Congress published draft amendments to the PRC Labor Contract Law. The public is allowed to submit comments on the draft until August 5, 2012. The amendments focus on the labor dispatch related articles of the Labor Contract Law and proposes to strengthen the administration of labor dispatch companies and protect the rights and interests of dispatched workers. According to the draft amendments, to engage in labor dispatch service, an entity must obtain an approval from the labor administration departments. A qualified labor dispatch company must have a registered capital of not less than RMB 1 million Yuan and a labor dispatch management system conforming to laws and regulations, as well as be complying with other conditions as prescribed by laws and administrative regulations. The amendments emphasize that workers can only be dispatched to temporary (no more than 6 months), auxiliary or substitute positions. The amendments do not address whether there will be a transition period or how this is intended to work for employees who are dispatched on longer term contracts to representative offices of foreign companies in China (who are permitted only to hire Chinese employees through dispatchment). The labor dispatch companies must warrant that the dispatched workers will enjoy the equal pay for equal work as the workers of a receiving unit in both the labor contract and the labor dispatching agreement. The amendment also increases fine to be imposed on labor dispatch companies that violate laws and regulations. 

The full Chinese text of the draft amendment is available here.

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