Third-Party Payroll Dispatch Audit

Dispatch Limitation

Statutory restrictions prevent companies from using dispatched labor for permanent, core, or highly skilled positions. When a company undergoes a third-party payroll dispatch audit, inspectors examine whether the dispatched staff are employed in temporary, auxiliary, or substitutable positions as defined by the Labor Contract Law. This classification check prevents companies from using outsourcing to avoid the legal protections given to directly hired employees, and violations result in direct fines and orders for direct hiring.

Social Security

Payroll contributions are audited to confirm that the dispatch agency pays the mandatory insurance premiums based on the correct local standards. During a third-party payroll dispatch audit, the employer must verify that the agency is registered in the same location where the employee physically works and that contributions are paid at the local rate. This step eliminates the practice of dispatching workers in high-cost cities while paying social security in low-cost jurisdictions, a discrepancy that can lead to joint liability for the employer and the agency, which often exposes the manufacturing entity to back-payment claims from the labor bureau.

Audit Procedure

Compliance officers inspect payroll receipts, social security records, and dispatched contracts to identify any non-compliant practices. A third-party payroll dispatch audit requires the employer to present copies of the service agreements with the agency and proof of wage payments to the workers. This documentation is cross-checked against the social security database to verify alignment, and any inconsistency triggers a formal warning and an administrative order to correct the staffing structure within a specified period.