Opinion: Regulating labour dispatch

On December 28 2012, the National People's Congress promulgated an Amendment to the PRC Employment Contract Law (中华人民共和国劳动合同法) (Amendment), which aims to enhance the restrictions on labour dispatch and took effect on July 1 2013. Eight months later, on August 8 2013, the Ministry of Human Resources and Social Security (MOHRSS) released the draft of the long-awaited Several Provisions on Placement (人力资源社会保障部劳务派遣若干规定) (Draft) that constitutes implementing rules of the Amendment for public comments. In our view, in the Draft, the MOHRSS intends to loosen some restrictions under the Amendment, aiming to achieve a soft landing.

Labour dispatch defined

The Employment Contract Law (ECL) and the Amendment both fail to define what labour dispatch is. This causes confusion and difficulties in practice. For example, is the secondment of employees among affiliated companies deemed labour dispatch and thus subject to the restrictions? What is the line between labour dispatch and outsourcing services? To address this issue, the Draft defines “labour dispatch” as a for-profit business model in which an employer (the staffing agency) hires an employee (the dispatch employee) and seconds the dispatch employee to work for and be under the direct management of another employer (the user entity). According to this definition, any not-for-profit secondment of employees would not be considered labour dispatch. The Draft also specifically excludes the following three types of secondment from the scope of labour dispatch: