Labor Dispatch and Outsourcing

By Lucy Lu  Dai Zhengcao King&Wood Mallesons’ Labor Group

lu_lucySince the amendment of the Employment Contract Law in late 2012, together with the release of a series of administrative statutes and divisional regulations, the labor dispatch method seems to become gradually less used.  Worries about the labor dispatch system have spread throughout the whole labor market, which also makes it difficult to determine whether to adopt the method or discard it.  Recently, the Shanghai Administration of Human Resources and Social Security and Shanghai High People’s Court jointly issued Meeting Minutes regarding Applicable Laws on Labor Dispatch (the “Minutes”).  The Minutes provide interpretation regarding the legal consequences of infringement of laws on labor dispatch, the circumstances for sending a dispatched employee back, outsourcing and other problems.  For those employers trapped in such dilemmas, the Minutes are widely considered as a shot in the arm.  Will labor dispatch quickly fade away in a short period due to legal limitations successively released? Will companies assume huge liabilities due to current noncompliance with labor dispatch regulations? The answers may not be  a simple “yes” or “no” based on our following analysis and comments.
Continue Reading Is Labor Dispatch Fading Away? Not That Simple