Answer: As shown in Is my labor dispatch contract invalid? there is a framework defect in the law of invalidity of labor dispatch in China, and this answer article analyses and deduces a more reasonable framework to assess the invalidity of labor dispatch.
Combined with the analyses of the current judicial decisions and according to the essential characteristics of the subordination or dependence of employment relationships, a more feasible principle to assess the validity of labor dispatch can be as follows:
To judge whether the labor dispatch is invalid, it mainly depends on two factors. The first part is the substantive characteristics of the relationship between the host employer and the employees, which includes: first, whether the nature of the job position is auxiliary. For example, the work of an accountant dispatched to an accounting firm is obviously not auxiliary, and there is a higher likelihood of a direct employment relationship. Secondly, whether the job position is temporary or not. If the position of the dispatched employee is permanent, the employee is more likely to be judged as a direct employee of the host employer. Finally, whether the employee is integrated into the host employer, and whether the company unifies the management of the dispatched employee with other ordinary employees in daily management.
The second part is the agreements provided in the labor dispatch contract signed by the human resources company, the host employer, and the employees, the contents of which stipulate who is the employer of the employees, and whether the host employer treats the employees as employees or an external service personnel. If the labor dispatch contract clearly stipulates that the human resources company is the employer and the host employer is only the third party controller, it should be more inclined to the absence of direct employment relationships. The way the host employer treats the employees and the employees’ perception of the relationship are also important considerations. If evidence shows that both the host employer and the employees believe that there are employment relationships between the two parties, and the employer treats the employees as a general employee, the direct employment relationships are more likely to exist.
This judgment of invalidity of labor dispatch is similar to the distinction between contractors and employees, the core of which is to judge whether the relevant workers are employees of the employer that actually use labor according to the essence of employment relationship and the cognitions of both parties (or three parties). But the difference between the two is that the labor dispatch must have employment relationships, either between the employees and the dispatch employer, or between the employees and the host employer, while for the latter relationship, the worker may be an independent contractor, not subordinate to the company who receives services.
This article is a part of our new book“Employment Law in China: A Practical Guide. A book about “What should I do” with case laws.”Stay tuned, and the book will soon be published as an electronic books!
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