China Issues Q&As on Labor Dispatch Licensing

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Jul. 3 – China’s Ministry of Human Resources and Social Security (MHRSS) released a set of Q&As regarding the “Implementing Measures for Labor Dispatch Licensing (hereinafter referred to as the ‘Measures’)” on June 21, detailed information can be found below.

Q: What’s the background for introducing the Measures?

A: Previously, there were two loopholes in China’s labor law system:

  • The threshed for setting up a labor dispatching entity was too low and only required RMB500,000 registered capital; and
  • No laws and regulations had granted any authority to the labor administrative departments regarding the supervision of labor dispatching entities.

Due to such loopholes, many entities without the proper operational capacity have entered the labor dispatching industry, and employees dispatched by such entities are often underpaid and cannot receive the appropriate and relevant benefits.

As such, the MHRSS has decided to formulate a series of implementing measures to tighten loopholes on hiring dispatched workers, and to offer better protection to the interests of such workers.

Q: What are the main contents of the Measures?

A: Based on the newly revised Labor Contract Law and Administrative Licensing Law, the Measures have regulated the following aspects of the labor dispatching business:

  • Jurisdiction of labor dispatch licensing;
  • Eligibility requirements for establishing a labor dispatching entity;
  • Approval procedures for labor dispatch licensing; and
  • Supervision and management of labor dispatch licensing.

Q: How do the measures divide the labor dispatch licensing jurisdiction?

A: The Measures prescribe that the MHRSS shall be responsible for the supervision of labor dispatch administrative licensing across the country, while the administrative departments of human resources and social security at the county level and above shall be responsible for the labor dispatching administrative licensing, as well as the associated supervision and inspection duties, within their respective administrative regions.

Q: What kinds of materials are required for the application of a labor dispatching license?

A: Entities intending to engage in the labor dispatching business shall submit the following materials to the competent authorities:

  • Application form for the labor dispatching license;
  • Business license or the Notice of Preliminary Approval of Enterprise Names;
  • Articles of association;
  • Capital verification report or financial audit report;
  • Certificate for the use of business premises and information on office facilities and equipment;
  • Identification paper of the enterprise’s legal representatives; and
  • Information on the enterprise’s labor dispatching management system.

Q: How do the Measures regulate the licensing process?

A: The Measures have set out detailed rules regarding the inspection period and licensing procedures, specifically:

Upon submission
Where, upon submission, the application materials contain errors that can be corrected on the spot, the licensing authority shall allow the applicant to correct such errors on the spot.

Where the application materials are incomplete or are not in conformity with the statutory form, the licensing authority shall inform the applicant, on the spot or within five working days, of all the materials needed to be supplemented or corrected at once.

Upon inspection
The licensing authority shall decide whether to grant the labor dispatching license within 20 working days following the date of application submission and shall inform the qualified applicant to collect the Labor Dispatching Business License within five working days from the date of the final decision.

Q: How will the relevant human resource and social security departments reinforce supervision over the labor dispatch licensing business?

A: The Measures strengthen supervision over the labor dispatching licensing business by requiring labor dispatching entities to submit the annual labor dispatching business operation report to the licensing authorities before March 31 of the following year. Moreover, the licensing authorities shall verify such reports and include the verification results and supervision information into each enterprise’s credit records.

Q: Under what circumstances can a licensing authority cancel a labor dispatching license?

A: Under any of the following circumstances, a licensing authority or its superior administrative organs may cancel a labor dispatching license:

  • Where staff within the licensing authority have abused their power or neglected their duties and issued the Labor Dispatching Business License to applicants who do not satisfy the relevant requirements;
  • Where the Labor Dispatching Business License has been issued beyond the statutory authority;
  • Where the Labor Dispatching Business License has been issued in violation of statutory procedures; and
  • Other circumstances stipulated by laws and regulations.

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