China Cracks Down on Employee Secondment Arrangements
Proposed amendments to China's Labor Contract Law will severely restrict secondment of employees, an arrangement where companies doing business in China contract employees via a labor agency.
- (1888PressRelease) August 31, 2012 - Sunnyvale, CA - The popular scheme sometimes allows companies to avoid entering into long-term employment contracts in China as these, if not handled properly, can expose employers to onerous Chinese labor law compliance and penalties.
A draft of the Amendments to the PRC Labor Contract Law was recently published for public discussion ("Draft Amendments"), and according to these Draft Amendments, seconded employees in China can only be employed if the work is temporary, auxiliary or substituting in nature.
The current Chinese Labor Contract Law already has similar provisions but requirements pertaining to the nature of the work positions have not been compulsory. According to China's labor law officials, the current system has left many seconded employees with compensations not commensurate to their work and also with deprivation of adequate health and safety rights.
The Draft Amendments have provided clear details on what constitutes temporary, auxiliary or substitute work positions.
* Temporary work position lasts no longer than six months.
*Auxiliary work position is where services are provided to those who are carrying out work inherent to the enterprise.
*Substituting work position is where services are provided to those who are carrying out work inherent to the enterprise.
The Draft Amendments are scheduled to be reviewed by the PRC People's Congress and are expected to be passed by end of 2012.
Foreign invested companies with seconded employees may need to revisit their employment law compliance strategies and employee structures in the wake of these developments. Once the draft amendments are approved, no Chinese employers can use seconded employees for their principal business activities for an extended term.
For more details on this issues or for any questions about doing business in China please email media ( @ ) nair-co dot com
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For more information on this topic email media ( @ ) nair-co dot com
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