Answer: Article 58 of the Employment Contract Law stipulates that a labor dispatch company shall sign a fixed-term employment contract with an employee for more than two years, but it does not stipulate whether it is necessary to sign a permanent employment contract by mutual agreements or when the legal requirements are met (for example, after the parties have signed two fixed-term contracts).

Judging from judicial decisions, the requirement of dispatch employers to sign permanent contracts with their employees are unlikely to be upheld in most courts in provinces and cities in China.

These places either stipulate in the form of local judicial guidance that labor dispatch must have a fixed-term contract rather than a permanent employment contract, or interpret the section in the Employment Contract Law, that labor dispatch should have a fixed-term employment contract with over two-year terms, to the same effect. These places include Liaoning Province, Shandong Province, Fujian Province, Tianjin City and Hezhou Intermediate Court of Guangxi Zhuang Autonomous Region.¹Article 10 of Liaoning Province’s Guiding Opinions on Several Issues Concerning the Trial of Labor and Civil Servant Dispute Cases (1) stipulates that if a worker requests a labor dispatch company to conclude a permanent employment contract, it shall not be supported. Sun Aiying, Jinan Kaiderong Human Resources Co., Ltd. Civil Ruling on Application for Retrial of Employment Dispute Civil Ruling of Shandong High Court (2021) Lumin 10597 No. ¡°The second paragraph of Article 58 of the Employment contract Law of the People’s Republic of China stipulates that ¡­ .. There is no problem of signing an permanent employment contract between the labor dispatch employer and the employee. ¡±Fujian Human Resources Service Co., Ltd., Zhou Rixiong and other civil applications for retrial of Employment Disputes Civil Ruling of Fujian High Court (2021) Min Min Shen No.919. Wang Chen, Tianjin North Human Resources Management Consulting Co., Ltd. Heping District Branch Employment Dispute Retrial Review and Trial Supervision Civil Ruling Tianjin High Court Civil Ruling (2020) Jin Min Shen No.1784. Civil Ruling on Employment contract Dispute Trial and Supervision of Shanghai Foreign Service (Group) Co., Ltd. and Opma Shipping Brokerage (Shanghai) Co., Ltd. Civil Ruling of Shanghai High Court (2020) Hu Min Shen No.1346. ¡°In this case, the employee and the dispatch employer signed three consecutive fixed-term employment contracts. The labor dispatch relationship was different from the ordinary employment mode, and Chen Lieda¡¯s claim that Foreign Service Company¡¯s automatic renewal of his fix-termed infringed on his rights and interests in signing a permanent employment contract has no legal basis.¡±

However, a few individual court decisions hold that the law does not prohibit labor dispatch from having permanent contracts, such as the case of Bai Xuerong, Guilin Intermediate Court of Guangxi in 2016.²Civil Judgment of Guilin Intermediate People’s Court of Guangxi Zhuang Autonomous Region (2016) Gui 03 Min Zhong No.1469, Employment Dispute Appeal Case between Bai Xuerong and Guilin Branch of China Mobile Communications Group Guangxi Co., Ltd. ¡°The special provisions of the Employment contract Law stipulate that when signing a contract, a fixed-term employment contract of more than two years should be concluded, and it does not prohibit the signing of a permanent employment contract.¡± This is another fundamental system defect of labor dispatch law in China due to insufficient understanding to the law and purposes.

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Mr. Wangdong

Mr. Dong Wang has been in practice for over 20 years, specializing in business law, including employment law, commercial law, company law, and intellectual property law. Mr. Wang has earned respect and trust from his clients due to his professionalism, fidielty, and kindness.

Email: wangdong@royalaw.com

• 1
  Article 10 of Liaoning Province’s Guiding Opinions on Several Issues Concerning the Trial of Labor and Civil Servant Dispute Cases (1) stipulates that if a worker requests a labor dispatch company to conclude a permanent employment contract, it shall not be supported. Sun Aiying, Jinan Kaiderong Human Resources Co., Ltd. Civil Ruling on Application for Retrial of Employment Dispute Civil Ruling of Shandong High Court (2021) Lumin 10597 No. ¡°The second paragraph of Article 58 of the Employment contract Law of the People’s Republic of China stipulates that ¡­ .. There is no problem of signing an permanent employment contract between the labor dispatch employer and the employee. ¡±Fujian Human Resources Service Co., Ltd., Zhou Rixiong and other civil applications for retrial of Employment Disputes Civil Ruling of Fujian High Court (2021) Min Min Shen No.919. Wang Chen, Tianjin North Human Resources Management Consulting Co., Ltd. Heping District Branch Employment Dispute Retrial Review and Trial Supervision Civil Ruling Tianjin High Court Civil Ruling (2020) Jin Min Shen No.1784. Civil Ruling on Employment contract Dispute Trial and Supervision of Shanghai Foreign Service (Group) Co., Ltd. and Opma Shipping Brokerage (Shanghai) Co., Ltd. Civil Ruling of Shanghai High Court (2020) Hu Min Shen No.1346. ¡°In this case, the employee and the dispatch employer signed three consecutive fixed-term employment contracts. The labor dispatch relationship was different from the ordinary employment mode, and Chen Lieda¡¯s claim that Foreign Service Company¡¯s automatic renewal of his fix-termed infringed on his rights and interests in signing a permanent employment contract has no legal basis.¡±
• 2
  Civil Judgment of Guilin Intermediate People’s Court of Guangxi Zhuang Autonomous Region (2016) Gui 03 Min Zhong No.1469, Employment Dispute Appeal Case between Bai Xuerong and Guilin Branch of China Mobile Communications Group Guangxi Co., Ltd. ¡°The special provisions of the Employment contract Law stipulate that when signing a contract, a fixed-term employment contract of more than two years should be concluded, and it does not prohibit the signing of a permanent employment contract.¡±