Confusion reigns as Employment Contract Law comes into effect
July 05, 2013 | BY
clpstaffThe amended Employment Contract Law came into effect this week, but businesses that use dispatch workers are still waiting for some of the key provisions to be clarified
The amended Employment Contract Law (中华人民共和国劳动合同法) came into force this week. Since it was first promulgated in 2008, the use of dispatch workers and agencies has soared. The main purpose of the amendments was to remove loopholes that have led to widespread abuse.
But many users of dispatch workers have been unsure how to deal with the amended Law because implementing regulations have not been released. In addition, the Ministry of Human Resources and Social Security (MOHRSS) has not released the percentage of dispatch workers a company is permitted to use.
This has left some uncertainty as to what actions companies should take to ensure they are in line with the Law. There has also been criticism from academics over the percentage, as they believe a percentage would not be necessary if the three types of labour dispatch workers allowed were clearly defined.
|Workforce percentages
Article 66 of the amended Law states: “The employer of temporary workers shall strictly control the number of temporary workers and the same may not exceed a certain percentage of the total workforce. The specific percentage shall be specified by the State Council's labour administrative department.”
But there has been no announcement from the MOHRSS, which has left companies and practitioners guessing. Many have put the amount at 30% to 40%. It is unlikely to be more than 50% as the point of the amended Law is that the majority of a company's workforce should be direct hires.
“The labour authorities are not able to give a percentage as some of them think it would be better to let industry associations or companies define this percentage,” said May Lu of MWE China Law Offices in Shanghai.
It is thought the difficulty in releasing a percentage is because of the many variables at play. For example, in northern China there are many state-owned enterprises that typically use more labour dispatch workers. But in the south, there are more privately-owned companies who use fewer labour dispatch workers.
This has lead to questions over whether a nationwide percentage would work. “Some voices prefer that provincial governments define the percentage. Local labour authorities could also do this, but they do not want take on that responsibility as this is really a very complicated issue,” said Lu.
|Definitions
Issues also remain over the definitions of the three types of dispatch workers: auxiliary, temporary and substitute. These have been criticised for being vague and hard for users to discern which category their workers fall in to.
“Temporary” means those that last for no more than six months, “auxiliary” are to be treated as supporting positions and not related to the core-business within the company and “substitute” are those which must be temporarily filled when an employee is on full-time study or leave.
“Auxiliary is truly the most difficult to define because there are so many interpretations as to what the core business could be. The other two are fairly concrete,” said Lu.
|Reviewing positions
Lu noted that academics in China think that a percentage would not have been necessary if the three types of labour dispatch workers had been clearly defined. This is a practical solution, as concrete definitions would mean users are limited because they would need a specific reason for using that dispatch worker.
It is unclear when this situation will be clarified. However, with the amended Law already in effect companies who have not reviewed their policies should start. Lu advises companies that use a lot of dispatch employees to review their positions and job duties and see which category they fall into. From there, it is possible to determine which employees should be switched to direct hires.
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