Ambiguity around labour dispatch still abounds

In the past few months amendments to the Labour Contract Law (LCL) – which were passed by the standing committee of the National People’s Congress (NPC) on 28 December 2012 – and their impact on employers have generated significant buzz and concern. The amendments further frame the original LCL provisions, which came into force in January 2008, and focus on labour dispatch arrangements with the aim of giving more bite to the 2008 provisions.

While the amendments provide greater clarity about who may be engaged under the labour dispatch system, the way in which the amendments will be interpreted and enforced remains unclear, as does the full extent of the impact that they will have on employers. What is clear is that there will be a momentous change – at least on paper – to the employment arrangements for millions of employees on 1 July 2013, when the amendments come into force.

This article discusses the changes raised by the amendments and focuses on the following key areas of uncertainty that legal practitioners and employers should be aware of:

• the transitional provisions;
• the proportion of dispatched workers in the workforce;
• temporary, auxiliary or substitute positions;
• equal pay for dispatched workers; and
• the potential impact on alternative outsourcing arrangements.

Lesli Ligorner is a partner in the Shanghai office of Simmons & Simmons. Emma Powell is a legal assistant resident in the firm’s Hong Kong office and Johnny Choi is an associate at the firm’s Beijing office