Local Sourcing Hires and the Commission You Never See
Hidden sourcing commissions inflate component unit costs; establishing dual-signoff protocols and auditing sub-tier invoices eliminates unearned supplier rebates.
FESCO Labor Dispatch
Meaning
Outsourced human resource model where a specialized foreign enterprise service company acts as the employer of record for workers physically deployed at a separate client facility. This arrangement allows foreign invested entities in China to satisfy local social insurance and housing fund requirements through a professional third party agent. Specific regulations from the Ministry of Human Resources and Social Security govern the quota of workers used in this manner.
Statutory Agency
Authorities require that any entity providing fesco labor dispatch holds a valid human resources service license issued at the municipal level. This credential allows the intermediary to handle all official interactions with the tax bureau and the pension office on behalf of the personnel. Direct employers retain control over daily tasks but have no direct legal link for payroll processing.
Responsibility for salary transfers remains with the licensed dispatching entity.
Dispatch Limits
Commercial law stipulates that dispatched staff may only be used for temporary, auxiliary or substitutable roles within the host organization. Usage outside these definitions can lead to the labor bureau reclassifying the relationship as direct employment. This boundary is strictly monitored during annual compliance audits to ensure no department overuses casual contracts for permanent positions.
Fines follow if the ten percent threshold for total dispatched workforce is crossed.
Contractual Split
Tripartite agreements clarify the split in liability between the worker and the agent and the host firm. Liability for workplace safety injuries sits with the site manager while dispute resolution for benefit payments involves the dispatching company. Standard clauses define exactly who covers the termination payouts when a project finishes early.
Consistency in these contracts ensures legal stability for foreign managers.