Managing Cross Border Staffing and Permanent Establishment Risks
Cross border staffing into China without local entity structuring exposes foreign parents to deemed profit enterprise income tax and labor law penalties.
Labour Contract Law Article 57
Meaning
Labour Contract Law Article 57 governs the dispatch service provider requirements within the People Republic of China. Statutory provisions mandate that any enterprise operating as a dispatch agency must maintain a registered capital threshold of five million renminbi alongside fixed physical premises and comprehensive internal management rules. Local provincial labour bureaus administer the licensing process and inspect compliance standards during annual corporate filings.
Capital Verification
Financial stability checks enforce solvency prerequisites before operations begin. Provincial authorities examine bank statements and accounting audit reports to confirm paid capital reserves remain intact. Operational continuity relies upon this proof of liquid assets because agencies carry joint liability alongside host companies for workplace injuries suffered by dispatched workers.
Service Scope
Permissible deployment categories restrict dispatch arrangements to temporary auxiliary or substitutional job roles. Host companies deploy temporary staff exclusively for positions lasting under six months unless production lines undergo major retooling. Manufacturing facilities violate statutory limits when utilizing dispatched labour for core assembly tasks.
Joint Liability
Statutory frameworks establish shared accountability for wage disbursements and social insurance contributions between the dispatch agency and the employing organization. Injured workers file compensation claims against either entity under joint recourse rules. Enforcement practice demonstrates that local labour dispute arbitration committees routinely hold host factories fully responsible when insolvent agencies fail to remit mandatory social security payments.