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China – New labour laws come into effect

01 July 2013

The People’s Republic of China has today enacted new legislation making it more difficult for employers to hire temporary workers, known in China as ‘dispatch’ workers. The purpose of this new law, approved on 28 December 2012, is to encourage employers to hire fulltime employees, instead of relying on dispatch workers.

The Government requires companies to limit the number of dispatch workers hired at any given time. Precise information regarding the exact limits has not yet been publicised, although it is expected to be in the region of 10 – 30%, according to Lexology.com.

The new legislation places additional requirements on labour dispatch agencies. Agencies must have registered capital in excess of RMB 2 million (USD 323,196), four times the previous requirement of RMB 500,000 (UDS 80,799). The agencies must also have a permanent business location, a permit from the Government to carry out labour dispatch, and an internal dispatch policy that complies with all relevant labour laws and regulations.

Under the new legislation dispatch workers are now legally entitled to ‘equal pay for equal work’, endowing dispatch workers with the same rights and conditions as permanent employees. The Chinese Government, in its new legislation, has clarified the differences in work statuses, previously acknowledged as either fulltime or dispatch. Dispatch has now been broken down into three categories, each with its own rules and regulations:

Temporary – dispatch workers with a contract of no more than 6 months.

Auxiliary – vaguely described as jobs related to ‘non-core business’.

Substitute – dispatch workers covering for fulltime staff who are on maternity leave, study leave, or other temporary leave.

Companies found to be in breach of the new legislation face tougher penalties. Employers and labour dispatch agencies found to have violated the new Labour Laws, and failing to rectify the violation in a specified time period, will be fined between RMB 5,000 (USD 808) and RMB 10,000 (USD 1,616). Increasing the previous penalties from a minimum of RMB 1,000 (USD 162) to a maximum RMB 5,000 (USD 808). 


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