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MOHRSS Released the Draft Regulation on Agency Work for Public Consultation 

The Ministry of Human Resources and Social Security (MOHRSS) has released the draft of Regulation on Agency Work for one-month public consultation from7 August – 7 September 2013. The draft Regulation is the first specific regulation to control the excessive use of agency workers in China, estimated to stand at 60 million by the ACFTU in 2010. The agency workers are hired in large numbers in the state-owned enterprises and the public sector up to 50% of the total workforce in some cases. In December 2012, the Labour Contract Law (LCL) was revised as an interim measure to narrow down the scope of usage of agency workers which was defined loosely in the LCL . The result was the proliferation of agency work in almost all sectors. Since the revision of the LCL last year, the employers began to clean up and lay off the agency workers in large numbers, in anticipation of stricter regulations to follow. For instance, Citic Heavy Industries at Luoyang city of Henan province laid off 1700 workers at a time in April 2013. Strikes were staged by the agency workers in Delphi (Beijing), International Paper (Panyu, Guangzhou), and the Chinese Medicine University No.1 Hospital in Guangzhou city to demand for an employment contract, social securities and equal remunerations.

The draft Regulation on Agency Work seeks to put an effective control over the situations while balancing the employment pressure and minimizing the setback to the agency workers currently employed. The draft goes further to set a percentage cap on the size of agency workers at the enterprise, and includes the consultation with the trade union and workers’ representatives in the process. In the meantime, the agency workers are protected from immediate dismissals until their current contracts expire. It is expected that the “natural” replacement of the agency workers by contract workers will eventually bring the size of the agency workers within the percentage cap.

Although the draft regulation repeats the protection of equal pay for equal work for the agency workers, it is still different from equal remuneration and equal treatment. One of the major discriminations in regard to job security is the exclusion of the agency workers from signing non-fixed term contract with the employing unit after ten years of service or two consecutive employment contract. This provision in the Labour Contract Law (2007) is not applicable to the agency workers and the draft law has not extended the protection nor provide for their regularization.

The effective protection of not only remunerations, but also the job security, training and promotion opportunities of the agency workers depend on whether they are organised and represented in collective bargaining in the hiring unit. The draft regulation requests the trade union to step up and rectify the abusive use of agency workers. Yet not much is provided in the draft law to state clear the right of the agency workers to form trade union for collective bargaining in the hiring unit. By law the agency workers are not discriminated from joining the trade union in China, yet they are unionized by the ACFTU mainly at the employment agent and are excluded from collective bargaining at the hiring company. The inhibition is not a legal one but financial as the official trade union is funded mainly by a membership tax on the employers rather than the membership fees collected from its members.

The legislative plan is not clear yet after the one-month consultation, though it is expected that the law will be passed within this year. Meanwhile, the agency workers still face a precarious situation of lay-offs without protection, or being made into out-sourced workers. Rather than regularizing work, the employers and especially the state-owned sector is likely to switch to more aggressive out-sourcing as a counter-measure to the new law.
Major provisions in the draft Regulation on Agency Work
Definition: Agency work refers to the employment of workers by an employment agency to supply to a hiring unit and subject to the management of the hiring unit.

Employment agency: To plug the loophole of disguised employment, the hiring unit is banned from using workers employed by an employment agent that it runs or invests in.

Scope of application: Agency workers are used only in “temporary, auxiliary and substitutive positions” whose definition has been narrowed in the revised LCL (2012) . The draft regulation requires the hiring unit to state clearly a list of the auxiliary posts to be filled in by agency workers. The trade union or the workers’ assembly should be consulted in the process, and the list should be publicised in the enterprise for monitoring. The size of agency workers used for auxiliary work in the enterprise is capped at 10% of the total workforce .

Protection: The draft regulation lays down the protection of the agency workers regarding the employment contract with the employment agent , its termination and compensations. More stability is supposed to be given to the agency workers by requiring the employment agent to sign an employment contract of at least two years with them, or a non-fixed term contract if both sides agree. Further casualisation such as sending the agency workers to work on job base, part-time base or probation base by extensions is prohibited.

Legal responsibility: The legal responsibility is now split between the employment agent, as the employer of the agency workers, and the hiring unit. However, if an agency worker without an employment contract is used in the hiring unit, the hiring unit will be regarded as the legal employer who should provide an employment contract to the agency worker. Otherwise, the agent and the hiring unit have respective roles and liabilities regarding situations such as the mediation of labour disputes, termination of assignment , provision of social securities, and minimum wage protection. The penalty for violations is revised to RMB5000-10,000 per agency worker and cancellation of the agency license.

Equal pay for equal work: Working in the hiring unit, the agency workers shall be protected with equal salary as the regular workers. The hiring unit is also requested to cover the agency workers it continuously uses for regular wage reviews.

Transition: To prevent the mass layoff of the currently hired agency workers before the new regulation comes into effect, the draft proposes some transitional arrangement. The agency workers, currently hired in posts where the percentage cap has already been exceeded, shall continue to be hired until their contracts terminate. The hiring unit is prohibited from dismissing them using the pretext of violating the new law. There is no time restriction as to the transition period as it is supposed to be completed with the natural turnover of the agency workers to bring down the size of the agency workers within the percentage cap.

Trade union: The draft regulation repeats the right of the trade union to monitor the hiring unit for rectification if agency workers are excessively or illegally used, and to provide legal aid to the agency workers in labour arbitration or litigations. Yet the agency workers are not provided with the right to join the trade union in the hiring unit for the purpose of collective bargaining.

Agency work is allowed in “temporary, auxiliary and substitutive positions” in the LCL.

The temporary posts should not be longer than six months and the substitutive posts are open when replacing a worker on leave. Whereas the auxiliary posts refers to the non-core businesses of the enterprise.

The missions of the UN, the foreign government and financial institutions, as well as the foreign press agents are not subject to these limitations.

The employment contract between the agency worker and the agent is regulated to include the job description, the place of work, the term of the placement, the salary and social security provisions for the agency workers. Other contract provisions are not mandatory but recommended, such as work and rest, OSH protection, work injury and compensations.

The hiring unit can send the agency workers back to the employment agent when:
(1) the hiring unit declares bankruptcy, closure of business, or a merger.
(2) the number of agency workers has exceeded the 10% cap. The employment agency should provide the agency workers, sent back by the hiring unit, with legal minimum wage.


8 August, 2013

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