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China – New law makes it more difficult to engage with agency workers

12 March 2013

In December last year, China tightened legislation for the use of agency workers which will come into effect on 1 July 2013 with the aim to foster equal treatment between direct and agency employees. Barrister, Fatim Kurji, a UK-based employment law expert, said that these changes will make it more difficult for employers to engage agency workers.

“But are they enough of a disincentive to really impact upon the numbers? There is a very real concern that with regions in China competing for investment from foreign companies, some may not enforce the penalties as strictly as others. The fact that no single country-wide cap has been set suggests a level of fluidity that weakens the commitment to reducing the number of agency workers,” she said.

But the amendments to China’s contract law show several shortcomings.

“Visibly absent from the amendment are the more radical changes proposed by China Labour Bulletin, a workers’ rights organization, whose suggestions included restricting the type of commercial activities performed by employment agencies, an express requirement for employment agencies to pay workers’ social insurance premiums, extending the definition of equal pay to include social insurance benefits and setting a 5% cap on the number of employees,” said Ms Kurji.

She said the amendment also fails to address the problem of continuous agency work and creates uncertainty. Under the amendment, “temporary” is defined as a period of six months. “The issue of renewal is not addressed,” said Ms Kurji.

“This leaves open the proposition of employers engaging agency workers on unlimited consecutive ‘temporary’ contracts. A formal requirement to move agency workers over to an employment relationship after a fixed period of time, for example 12 months, would have addressed this lacuna.”

She said that the amendments overall indicate that agency work should be the exception rather than the rule in China, but its changes are modest. “It has avoided the more dramatic measurers that are necessary if agency worker numbers are to be significantly reduced. The impact, as always, remains to be seen,” said Ms Kurji.

John Nurthen, Executive Director for International Development at Staffing Industry Analysts said, “many of the changes proposed to the Labour Contract Law are a natural extension to the current legislative framework and will help in stamping out some abuses. This may actually benefit credible international staffing firms operating in China who are currently competing against local providers who are frequently flouting current regulations.”


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