· Area of Law： Trade Unions

· Level of Authority： Local Judicial Documents

· Date issued：12-31-2014

· Effective Date：12-31-2014

· Issuing Authority： Shanghai Municipal Human Resources & Social Security Bureau Higher People's Court of Shanghai Municipality

· Status： Effective

Meeting Minutes of the Shanghai Municipal Human Resources and Social Security Bureau and the Shanghai High People's Court on Several Issues Concerning the Application of Law in Labor Dispatching
In accordance with the Labor Contract Law of the People's Republic of China (hereinafter referred to as the "Labor Contract Law"), the Decision of the National People's Congress on Revising the Labor Contract Law of the People's Republic of China (hereinafter referred to as the "Revision Decision"), the Law of the People's Republic of China on Mediation and Arbitration of Labor Disputes (hereinafter referred to as the "Mediation and Arbitration Law"), the Interim Provisions on Labor Dispatching of the Ministry of Human Resources and Social Security (hereinafter referred to as the "Dispatching Provisions") and other relevant laws and regulations, following opinions on several issues concerning the application of law in labor dispatching are hereby put forward as follows:
1. Issues concerning the transitional period for administrative permit
According to the Revision Decision, a transitional period of one year shall be given for the entities that have engaged in labor dispatching business before the implementation of the Revision Decision to obtain administrative permit in accordance with the law and none of such entities that fail to obtain the administrative permit after expiry of the transitional period may engage in any new dispatching business. Therefore, during the period between July 1, 2013 and June 30, 2014, the labor contracts and the dispatching agreements executed by the entities that have engaged in the dispatching business prior to the implementation of the Revision Decision and may engaging in the dispatching business without obtaining the administrative permit may continue to be valid until the expiration thereof.
2. Issues of handling in case of the cancellation, revocation and failure of renewal of administrative permit
If the Business License for Labor Dispatching is not renewed upon expiration or is cancelled or revoked because the labor dispatching entity fails to meet the conditions for administrative permit, originally executed labor contracts and dispatching agreements may continue to be valid until the expiration of the period of dispatch.
3. Issues of handling in case of operation of dispatching business without permit
If en entity engages in dispatching business without permit, the rights and obligations already performed by the three parties before the dispatching agreement is held to be invalid may be determined according to the original agreement and the actually performed particulars.
If the employer rescinds the labor contract in accordance with Item (3) of Article 40 of the Labor Contract Law, the request of the employee for payment of financial compensation shall be upheld.
4. Issues concerning the dispatching in violation of the law
The provisions on the "temporary, auxiliary or substitute jobs" and the percentage of dispatched workers under the Revision Decision and the Dispatching Provisions are all management provisions with the dispatching entities or employing entity as responsibility subjects and the mere violation of the said management provisions shall not affect the validity of the dispatching agreement and the labor contract. The dispatching entity or the employing entity that violates the above management provisions shall be ordered by the administrative department of human resources and social security to make rectification within specified time limit.
A dispute among the parties concerned as to whether or not a specific job falls within temporary, auxiliary or substitute jobs or whether or not the dispatched workers in the employing entity have exceeded the percentage prescribed in the law does not fall within the scope of acceptance of dispute cases specified in the Mediation and Arbitration Law and shall not be accepted by the labor dispute handling institution. The request of a party concerned for confirming the labor contract or the dispatching agreement invalid or the request of the worker for confirming the existence of the labor relationship with the employing entity lacks legal basis and shall not be upheld.
5. Issues of disputes involving equal pay for equal work
If the employing entity applies different labor remuneration distribution methods to the contract-based workers and the dispatched workers without complying with the Revision Decision and the dispatched worker requires the employing entity to implement the same labor remuneration distribution method in accordance with the Revision Decision, the administrative department of human resources and social security shall urge the employing entity to make rectification in accordance with the law. However, the labor dispute handling institution shall handle in accordance with the law the labor remuneration dispute among the parties concerned that is within the scope prescribed in the Mediation and Arbitration Law.
6. Issues concerning the circumstances where the dispatched worker is returned
Article 12 of the Dispatching Provisions which lists some of the circumstances where the dispatched worker is returned is an informative clause. In practice, there are circumstances where the dispatched worker is returned according to law, the dispatching entity withdraws the dispatched worker voluntarily and the dispatched worker is returned upon agreement, etc. Therefore, the dispatched worker may also be returned under any of the following circumstances:
(1) The circumstances specified in Paragraph 2 of Article 65 of the Labor Contract Law;
(2) Circumstance specified in Items (1) and (2) of Article 44 of the Labor Contract Law;
(3) Circumstances specified in Article 21 of the Regulations for Implementation of the Labor Contract Law;
(4) Circumstance where the period of dispatch expires;
(5) Circumstance where the labor dispatching agreement is rescinded;
(6) Circumstance where three parties reach agreement in advance or reach consensus subsequently regarding the return;
(7) Circumstance where the dispatching entity withdraws the dispatched worker because the employing entity fails to perform the obligations;
(8) Circumstance where the employing entity returns the dispatched worker after consultation with the dispatching entity before the dispatching entity handles the deregistration formalities in accordance with Article 16 of the Dispatching Provisions;
(9) Circumstance where rectification is made due to violation of the provisions of the law; and
(10) Other circumstance where return is necessary under the provisions of the law.
7. Issues of handling in the case of disputes over re-dispatching after return.
Where there is any dispute arising out of re-dispatching after the dispatched worker is returned to the dispatching entity, the dispute shall be handled according to following measures:
If the worker is returned by the employing entity according to Article 12 of the Dispatching Provisions, the dispatching entity and the employing entity shall follow the provisions of Articles 13, 15, 17 and 24 of the Dispatching Provisions.
In the event of return of the dispatched worker under any of the circumstances specified in Article 6 hereof, if the dispatching entity makes re-dispatch arrangement for the worker according to the stipulations of the labor contract, etc. while the worker does not agree to such arrangement, the dispatching entity may handle the matter according to relevant provisions of the rules and regulations, labor disciplines or the labor contract, etc. and any dispute between both parties arising therefrom shall be handled by the labor dispute handling institution in accordance with the law.
If the dispatching entity rescinds the labor contract with the worker who does not accept the re-dispatching arrangement in accordance with Item (3) of Article 40 of the Labor Contract Law, the request of the worker for the payment of financial compensation by the dispatching entity shall be upheld.
8. Issus of handling of the disputes regarding the lack of sufficient basis for return
If there is no sufficient basis for the return of the dispatched worker and the dispatching entity fails to make re-dispatching arrangement within a reasonable time limit (one month in general), the labor dispute handling institution shall uphold the dispatched worker in terminating the labor contract and claiming the payment of financial compensation in accordance with Article 38 of the Labor Contract Law.
9. Issues of handling of the disputes regarding rights and obligations of three parties to the labor dispatch
Labor dispatch involves three parties, i.e., the dispatching entity, employing entity and the worker, and the dispatching entity and the employing entity respectively assume responsibilities towards the worker. If the worker has any labor dispute with the dispatching entity or the employing entity, the labor dispute handling institution shall, in accordance with the provisions of the Mediation and Arbitration Law, treat the dispatching entity and the employing entity as co-parties and determine the legal liability of the dispatching entity and the employing entity respectively in accordance with relevant provisions of the Labor Contract Law and other relevant laws. If the employing entity causes any harm to the worker, the dispatching entity and the employing entity shall bear joint and several liability for compensation.
10. Issues of performance of the labor contracts and the dispatching agreements executed prior to the implementation of the Revision Decision
The law is silent on the issues of performance the labor contracts and the dispatching agreements legally executed during the period after the promulgation and before the implementation of the Revision Decision. According to the principles of "the law is not retroactive if there is no special provision and may be retroactive if there is special provision" and the principles under the Revision Decision for handling the labor contracts and the dispatching agreements legally executed prior to the promulgation thereof, the labor contracts and the dispatching agreements legally executed prior to the implementation of the Revision Decision may continue to be valid until the expiration thereof but the content thereof that fails to comply with the provision of equal pay for equal work under the Revisions Decision shall be adjusted according to the Revision Decision.
11. Issue of difference between labor dispatch and outsourcing of human resource services
Outsourcing of human resource services is a new thing in the market transformation. The process of transfer from labor dispatch to outsourcing of human resource services involves the change of legal relationship and adjustment of management rights, etc. and is complicated. When the handling of a case involves the issue of difference between labor dispatch and outsourcing of human resource services, the determination shall be made by taking into comprehensive consideration the application of rules and regulations, the intensity of the exercise of the command and management rights by the employing entity and other factors. When the contract issuing entity exercises partial command and management rights to the workers of the contractor as required by the management in terms of fire control, safe work, product and service quality and order of work places, etc., the labor dispute handling institution shall handle the case prudently based on the case facts and shall not simply determine that the legal relationship has changed.
In the outsourcing of human resource services, the contract issuing entity and the contractor may reasonably define the management boundary through agreement. If the contract issuing entity, while the outsourcing agreement is not held to be invalid, partially exceeds its powers in commanding the worker of the contractor, which does not have decisive role in changing the legal relationship, the request thus made by the worker for treating him as a dispatched worker or confirming his labor relationship with the contract issuing entity lacks legal basis and shall not be upheld.
Shanghai Municipal Human Resources and Social Security Bureau
Shanghai High People's Court
December 31, 2014