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NA BRIEFING South China Business Journal Photo from

abor Dispatch Services
Managing human resources is a thorny issue for some methods are usually tailored for recruiting long-term employees, it is
foreign-invested entities in China, particularly those who have typically more efficient for managers in seasonal and project-based in-

demanding deadlines or are less familiar with the HR environment. dustries to hire through labor dispatch.

Employee administrative procedures – which include areas such as

management of recruitment, work permit applications, labor con- Further, many foreign subsidiaries have headcount requirements

tracts, and payroll and tax declaration – can slow a project down or determined by the parent company’s employment budget. These re-

create operational risk. quirements can prove difficult for host companies that need more

workers to maintain daily operations.

Labor dispatch is an important

A C -E E -option for foreign companies in
ost ffective mploy Labor dispatch is a solution for a

China that require a low cost and ment Option for Growing host company that needs to hire
flexible method to hire employ- more laborers for temporary, aux-

ees. Whether it is a company that Businesses in China iliary, or substitute positions in ad-
needs to staff a short-term project dition to any allocated headcount.

within a demanding deadline, or Since paying dispatch workers is

one that needs to hire temporary deemed as a service fee, rather

workers to support its business during start-up, labor dispatch proves than employment expenses, hiring through labor dispatch allows a

a top choice compared with other traditional methods. host company to efficiently recruit more labor while in compliance

with the headcount requirement.

A Triangular Form of Employment

Unlike direct employment, labor dispatch has a triangular form of em- Dispatch Agencies

ployment relations, in which a host company hires dispatch workers Dispatch agencies help save operation costs for the host company. Ac-

from a dispatch work agency. While dispatched workers work for and cording to China’s Labor Dispatch Law, employers should make social

are supervised by the host company, they are in fact employed by the insurance payments to dispatched workers in the region where the ac-

dispatch work agency. tual work takes place. This triangular form of employment relations

allows for a more convenient and efficient way of paying social insur-

The dispatch work agency is the de facto legal entity responsible for ance, saving the host company time and money.

the administrative management of the employees. Since dispatch

agencies have considerable experience and knowledge of hiring local High profile dispatch agencies have multiple operating branch offices

workers, foreign entities often find that hiring through labor dispatch in China, meaning these agencies hold multiple business licenses in

is flexible, efficient, and cost effective. different provinces. For example, Dezan Shira & Associates’ Shenzhen

office has recently obtained a labor dispatch license, with its Beijing,

Managing Temporary Workers and Headcount Restrictions Shanghai, and other offices expected to follow suit.

It is common within seasonal industries and project-based work for

host companies to hire temporary workers. Given that direct hiring This article was first published by China Briefing.

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