CBL’s Introduction
Temporary staffing in China is highly regulated, so much so that a long checklist of compliance requirements must be considered in order to even legally use temporary staff. Only specific positions are eligible to use temporary employees, and no more than 10% of the headcount may be attributable to temps. On top of that, you could be subject to joint and several liability with a dishonest staffing agency if certain rules are followed.
In the official Chinese government guidance, translated to American English by CBL, the government’s compliance expectations are explained in detail, ensuring businesses can successfully use this resource for their China business operations.
Guidelines for Temporary Staffing Compliance
Temporary staffing in China is a basic mode of supplemental employment, allowed for positions that are temporary, auxiliary, or replaceable.
Here is what these terms mean for the position:
Temporary: needed for less than six months
Non-core: not a primary role in this business
Auxiliary: used to replace staff that are absent due to seasonal, holiday, or educational reasons
When using temporary staff, one of these three criteria must be satisfied; roles falling outside these criteria do not count.
China’s regulators require that you follow an inclusive interactive process with your staff to determine which roles are auxiliary, and specifically you are required to make a list of auxiliary roles and submit them to either a meeting of all the employees or your labor union for them to discuss and give their opinion. You must negotiate with your union or employees as equals to determine the list of auxiliary positions, and finally post notice at the workplace.
You face major legal liability for failing to follow the process, because how auxiliary positions are defined has a significant impact on workers’ interests.
Full-time employees with an employment contract must be used for any life safety, data confidentiality, or core technology related positions. For example, emergency response, mining, and chemicals positions.
Local law enforcement or labor regulators will issue penalties for violations of the above three criteria, if employees’ interests are impaired, you will be required to pay damages. Joint and several legal liability may also be imposed for general non-compliant use of temporary employees.
The ratio of temporary workers may never exceed 10% of the staffing client’s workforce, specifically, this is found by taking the number of staffed workers divided by the number of full-time employees who have signed an employment contract with the business.
Regulators note that the parent company in a corporate enterprise must do this calculation for each subsidiary business entity individually and may not consolidate staffing totals across the family of companies; this is required by the Employment Contracts Administrative Regulations.
So-called “labor outsourcing” is actually providing worker staffing; this occurs where one business entity contracts for its employees to work at another business entity, but is under the management and supervision of the client entity. In this case, the temporary staffing rules including the ratio of employees also applies.
An organization providing staffing services must obtain a permit from the local labor regulator and subsequently obtain an appropriate corporation or company business license, otherwise may not provide staffing services. (see China Employment Contracts Act §57)
When working with a staffing agency, especially if they advertise “labor outsourcing,” make sure to see they have been issued a Staffing Agency License and perform due diligence to see their worker management is legally compliant, specifically that they have an effective worker management policy, place of business, and work equipment.
Otherwise, if you use staffing services from a provider that doesn’t have a Staffing Agency License, you can be held jointly and severally liable with the staffing agency for all employment law claims.
Likewise, if the client’s worker management policy is ineffective for example the workers utilized have not signed an employment contract with the staffing agency, joint and several liability may also be imposed. The liability can be severe: you must pay the employee double wages for the period for the time they have not been given a written contract of employment, and if the situation persists beyond a year, an indefinite term employment contract will be automatically created by force of law. (See, e.g., China Employment Contracts Act)
A staffing services agreement must be signed by the agency and client, including basic provisions about the work including the “who, where, when, how long, and for how much pay,” describing in a single agreement how many workers will be provided and measures for ensuring equal pay for equal work. The agreement itself must provide for how social security contributions are made and for statutory benefits such as maternity and medical leave. Commission amounts and legal liability provisions must be covered.
Note that disputes often occur around ending worker assignments or for payment of fees; lack of specific provision governing wage payment obligations can result in joint and several liability imposed on the staffing client.
Employers should make sure that staffing agencies are renewing employment contracts in time, so as to avoid potential labor law liability. The client is required to inform temporary workers of their pay rates and right to overtime and bonuses, and ensure they receive equal pay for equal work. If there is no equivalent position, equal pay for equal work must be decided by looking at the most similar existing roles.
Social security contributions must be processed for all temporary employees by the staffing agency, but if the agency has not registered in the local region, contributions must be processed through the client company. Work-related injury incidents must be investigated and resolved by the staffing client, ensuring that the temporary employee can be effectively evaluated for occupational illness or injury entitlements; this means providing accurate information about occupational hazards in the workplace.
The staffing client is responsible for providing job skills training and admitting the temporary employee to the labor union. The worker may only work for the staffing client, they cannot be working at another organization during their assignment. Other common but prohibited employer actions include taking possession of the temporary employee’s identification documents or requiring them to provide a security deposit.
Temporary employees are entitled to participate in collective bargaining. The client is entitled to end the temporary worker’s assignment if they fail their trial period / perform poorly thereafter; or have disciplinary / criminal violations. The client may also end the assignment due to extended medical leave.
The staffing client may also be at fault when ending an assignment, and this occurs for changed business conditions, bankruptcy, and business transformation situations that make continuing the temporary employment relationship impracticable. The conditions for ending a worker’s assignment are closely regulated, so the staffing agency and client should not agree on their own conditions.
The staffing agency should end assignments for employees who are likely to have an occupational illness but not been evaluated, or who are disabled or on medical/maternity leave.
Note that they must wait for the statutory time periods on the above to complete before ending the assignment. Staffing agencies may not end assignments over compliance reasons such as lack or permitting or violating the staffing criteria. Unlawfully ending an assignment will result in a fine between 5,000RMB to 10,000RMB.
Sources
This article was translated to American English using the User Centered Translation approach from the following Chinese government publications. The content was reformatted and put in order.