Hiring and firing temporary employees in China

Hiring temporary employees can provide an affordable solution to manage workload fluctuations. Specifically, if there are unexpected employee absences or special projects which requires specialists onboard or extra employees to balance out the workload.

At Horizons, we encounter European companies with Chinese subsidiaries who hire part-time personnel or utilise third-party employment agencies, without establishing the correct management. Often, the European headquarter have not been informed that the subsidiary has employed temporary staff and onboarding training wasn’t conducted.
In such circumstances, the subsidiary can be exposed to risks and without robust corporate governance, the situation can quickly snowball out of control.

Below, we highlight the best practices for hiring temporary employees in China.

Ensure part-time employees do not exceed the statutory hours

Companies may hire part-time employees. In such cases, the labour relationship is concluded between the employee and the company. Although a written contract and a probation period is not required, the working hours shall not exceed four hours per day or an accumulated 24 hours per week.

Adopt labour dispatch under the statutory circumstances

Labour dispatch refers to personnel dispatched by employment agencies to receiving companies. Labour dispatch is a supplementary employment and shall only be adopted in the following circumstances:

  • Temporary work with a maximum term of 6 months;
  • Auxiliary position who supports a main employee position; and
  • Substitution of employee, who due to reasons cannot work within a period.

The dispatched worker is recognised under the Labour Contract Law as an employee of the employment agent. Therefore, a labour relationship is established between the employment agent and dispatched worker and a labour contract with same contractual terms of a normal labour contract shall be concluded. Although, the fixed term of employment shall be no less than two years.

Verify the employment agency

Employment agencies shall satisfy all the following conditions:

  • Registered capital of no less than 2 million RMB;
  • Proper business premises and facilities;
  • Established a work placement management system accordingly to laws and regulations;
  • Acquired business license with the labour administrative department, proceeded in the business registration formalities, obtained required licenses; and
  • Other requirements stipulated by the laws and regulations.

No employment agency shall operate without meeting the above conditions; therefore, companies should verify whether the employment agency can legally operate beforehand.

Include statutory items in the staffing agreement

The employment agency is required to enter into staffing agreements with receiving companies. The staffing agreement shall define the job positions, number of persons dispatched, the term of placement, amount and method of labour remuneration, social insurance premiums and the liability of breach of agreement.

Ensure obligations are executed  

Receiving companies are prohibited from transferring the dispatched worker to another employer and obliged to provide the following:

  • State labour standards and corresponding labour protection and working conditions;
  • Notify the dispatched employees of job requirements and salary;
  • Pay overtime wages and performance bonuses;
  • Provide welfare benefits appropriate for the position;
  • Provide the necessary training for the job position; and
  • Implement a normal wage adjustment mechanism for continuous labour dispatching.

Adopt the principle of equal pay for equal work

Companies shall pay dispatched personnel the same remuneration amount as employees in the same role or workload. And the remuneration system based on the principle of equal pay for equal work shall be extended to dispatched personnel. The employment agency cannot retain any part of the remuneration and wages are required to be paid monthly.

Ensure termination is conducted according to the Labour Contract Law of the People’s Republic of China

Companies may terminate the dispatched personnel according termination provisions of the Labour Contract Law (For more information on employee termination, please see our article China business: Labour 101). The employment agency then terminates the labour contract with such employee according to the relevant provisions.

If you would like more information about China labour law and HR best practices or other related corporate matters, send us an email at talktous@horizons-advisory.com, and we’ll have a Horizons professional contact you.