WHAT DOES THE NEW INTERIM REGULATIONS ON LABOR DISPATCH BRING TO US? Go back »
2014-05-28 | Nanjing
Certainly the new Regulation has brought significant impacts to the enterprises, especially to their current Human Resource structure, in this article, we would like to discuss about some major points that will concern you most:
(A) Retroactive Power
Article 29 explicitly required implementation time, what concerns the enterprises most is the retroactive power of the Regulation. That is to say, whether enterprises can return the dispatched staffs without punishment by this Regulation, and if the enterprises return the dispatched staffs after March 1, 2014, how will the Regulation be applied?
As non-retroactivity is the basic principle of law for setting up the new rights and obligations, and for the purpose of maintaining stable labor relations, any returning and new dispatching prior to March 1st 2014 is not subject to Regulation.
(B) Proportion of Dispatched Staff
The Regulation stipulates that the number of total dispatched staffs used by an enterprise should not exceed 10 percent of its total number of staffs, including regular staffs and dispatched staffs. Representative offices (ROs) of foreign enterprises, however, are not subject to this restriction on dispatched staffs’ proportions. The previous draft of the Regulation only limited the number of dispatched staffs used on auxiliary positions.
(C) Period of Adjustment of Scale of Dispatched Labor
Article 28 allows enterprises to gradually adjust the number of dispatched staff below 10% within two years, and go through registration procedure to the local Human Resource and Social Security Office.
For purpose of abiding to this strict and expressly stipulation of the rate, enterprise should pay close attention to the following issues:
(1) In the two years of transitional period, there exist legal risks for enterprises to fire staff by excuse of over rate of the dispatching rate of 10%;
(2) Prior to December 28, 2012, enterprises is not bounded by the provision of two years of transitional period, and the labor contract already signed can be effective until the termination provided according to the contract per se;
(3) Before the goal of reduction of the rate of 10% is reached, enterprise is not allowed to recruit new staffs if the rate of dispatched staff number over reached 10%;
(4) Enterprise is supposed to go through registration procedure to the local Human Recourse and Social Security Office for the employment plan to reduction of the over numbered rate of dispatched employment.
(D) Cross-Region Labor Dispatch
Under the Regulations, if a labor dispatching entity dispatches staffs to an employer located in another region, the social insurance to be enjoyed by the dispatched staffs should be provided according to the rates and standards of the place where the enterprise is located.
With respect to who makes the insurance payment, if the labor dispatching entity has a branch in the region where the employer is located, the local branch of the labor dispatching entity should pay the social insurance for the dispatched staffs; If it does not have a branch in the region, the host entity should pay for the social insurance on behalf of the labor dispatching entity.
(E) Termination of Labor Contract
The dispatched staff may terminate the labor contract by giving a written notification to the labor dispatching entity 30 days in advance. During the probation period, such notification may be given 3 days in advance.
The Regulation stipulates that the enterprise may return the dispatched staff back to the dispatching company due to the following reasons:
· Major change in objective circumstances;
· Mass layoffs due to financial difficulties;
· The host entity is dissolved or its operation is discontinued;
· The term of dispatching contract is due.
If the dispatched staff is returned because of the above reasons, the labor dispatching entity is responsible for redistributing the dispatched staff. The labor dispatching entity may only terminate the staff’s contract if the staff refuses a new dispatch offering equal or greater conditions.
Conclusion
As the first comprehensive labor dispatch regulation at China’s Ministerial level which will have effect on all enterprises within PRC territory, the Regulation has introduced significant changes to the current rules and will certainly bring challenges to foreign invested enterprises on human resource management. Though a tolerance period of two years have been given, the enterprises shall start the adjustment and reform of their HR system since now by converting dispatched labor to directly hired employees. As consequence, the enterprises shall complete their internal regulation system with the help of legal professionals in order to prevent potential legal risks derived from the direct hiring.
Source: www.dandreapartners.com