Meaning
Regulatory framework within the national employment law governing the temporary assignment of workers by a service provider to a third party enterprise for specific tasks. Labor dispatch is a common practice in the People’s Republic of China, used by companies to manage seasonal demand or to handle non core business functions. Under the Labor Contract Law, the dispatch agency is the legal employer of the worker and is responsible for paying wages and social insurance.
The receiving company, known as the using unit, provides the actual work environment and supervises the daily tasks of the employee. This arrangement is strictly limited to positions that are temporary, auxiliary, or substitutable in nature. The boundary of this practice is set by a national quota that limits the number of dispatched workers to ten percent of the total workforce of the using unit.
Employment Relationship
Tripartite structure of the dispatch model creates a complex set of rights and obligations between the worker, the agency, and the using unit. Labor dispatch requires a formal written agreement between the dispatch agency and the using unit, which must specify the duration of the assignment and the service fee. The worker must also have a fixed term labor contract with the agency for a period of at least two years.
This contract must include the names of the using units where the worker will be sent and the nature of the work they will perform. The agency is prohibited from charging any fees to the worker for the placement or from withholding any part of the wages paid by the using unit. This ensures that the worker is protected from exploitation and has a clear point of contact for any employment grievances.
Quota Restriction
Administrative limits on the use of dispatched labor are designed to protect the stability of the primary labor market and to prevent the abuse of temporary contracts. Labor dispatch is only allowed for positions that do not last more than six months or those that provide support to the main business of the company. The ten percent limit on dispatched workers is enforced through regular audits by the local human resources and social security bureau.
If a company exceeds this quota, it may be ordered to convert the dispatched workers into direct employees and may face significant fines. This restriction forces companies to prioritize long term direct employment for their core functions. The calculation of the quota includes all branches and subsidiaries of the company within the same municipal jurisdiction.
Workplace Standard
Operational requirements for the treatment of dispatched workers mandate that they receive equal pay for equal work compared to direct employees. Labor dispatch ensures that dispatched workers have the same right to join labor unions and to participate in workplace safety training as their permanent colleagues. The using unit is responsible for providing the necessary tools, equipment, and personal protective gear for the tasks assigned to the worker.
If a dispatched worker is injured on the job, both the agency and the using unit have legal responsibilities for the medical costs and the injury compensation. This shared responsibility prevents the using unit from neglecting the safety of temporary staff. The worker also has the right to refuse hazardous work that was not disclosed in the original assignment.
This legal framework balances the flexibility needed by businesses with the protections required by the workforce.
