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China - Govt. tightens loophole on hiring temporary workers

31 December 2012

China has  amended its labour law to ensure that workers hired through contracting agents are offered the same conditions as full employees as we forecast in September (for members only).

Contracted labourers now make up about a third of the workforce at many Chinese and multinational factories, and in some cases account for well more than half. Some foreign representative offices, all news bureaus and most embassies are required to hire Chinese staff through employment agencies, rather than directly.

Contracting agencies have taken off since China implemented the Labour Contract Law in 2008, which stipulates employers must pay workers’ health insurance and social security benefits and makes firing very difficult.

Under the amendment, “temporary” refers to durations of less than six months, while supplementary workers would replace staff who are on maternity or vacation leave, Kan He, vice chairman of the legislative affairs commission of the National People’s Congress standing committee, said at a press conference to introduce the legislation.

The main point is that contracting through agencies should not become the main channel for employment, he said, acknowledging that the definition of backup might differ by industry.

“In order to prevent abuse, the regulations control the total numbers and the proportion of workers that can be contracted through agencies and companies cannot expand either number or proportion at whim,” Kan said. “The majority of workers at a company should be under regular labor contracts.”

Although in theory contracted or dispatch workers are paid the same, with benefits supplied by the agencies who are legally their direct employers, in practice many contracted workers, especially in manufacturing industries and State-owned enterprises, do not enjoy benefits and are paid less.

Employment agencies have been set up by local governments and even by companies themselves to keep an arms-length relationship with workers. Workers who are underpaid, fired or suffer injury often find it very difficult to pursue compensation through agencies.

China would increase inspections for violations, Kan said, including the practice of chopping a longer contract into several contracts of shorter duration to maintain the appearance of “temporary” work.

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