1. Identify the actual arrangement and licensed agency
Labor Contract Law Articles 57 and 58 require an administrative licence for the dispatch business and make the dispatch agency the employing entity. Match the licensed entity to the proposed agreement, check licence validity and verify who will sign employment contracts, pay wages and administer social insurance. A general business registration or an employer-of-record marketing label does not establish dispatch permission. Article 67 also prohibits an employer from setting up an agency to dispatch workers to itself or entities under it.
Under Article 27 of the Interim Provisions on Labor Dispatch, an arrangement operated as dispatch is treated under those provisions even if called outsourcing or contracting. Examine who assigns work, approves attendance and leave, manages personnel and bears responsibility for the promised service result. Assess the facts together; no single label or document settles classification. If it is genuine service outsourcing, its distinct obligations still need review.
2. Document why each post is eligible
Article 66 of the Labor Contract Law and Article 3 of the Interim Provisions limit dispatch to temporary, auxiliary or substitutive posts. A temporary post must exist for no more than 6 months: rotating workers does not reset the life of a continuing post. An auxiliary post is a non-core-business post serving core-business posts. A substitutive post covers a defined period when an existing worker cannot work because of full-time study, leave or a similar reason.
For auxiliary posts, management approval alone is insufficient. The user entity must arrange discussion by the employee congress or all employees, obtain proposals and comments, determine the posts through equal consultation with the union or employee representatives, and publish the result internally. Retain the business-function map, job descriptions, meeting and consultation records and publication evidence. For temporary or substitutive work, retain the actual time-limited need and expected end date.
3. Calculate the 10% ceiling at the correct entity
Article 4 caps dispatched workers at 10% of the user entity’s total workforce, defined as its directly contracted employees plus the dispatched workers it uses. Calculate dispatched workers ÷ (directly contracted employees + dispatched workers). For illustration, 90 directly contracted employees and 10 dispatched workers give 10%, not 10 divided by 90. Use the entity legally capable of entering labor contracts; do not dilute the percentage with unrelated group headcount. Check the proposed intake and later changes in direct headcount.
Article 25 exempts specified arrangements, including foreign-enterprise resident representative offices and representative offices of foreign financial institutions in China, from the post-type and dispatch-ratio restrictions. An ordinary foreign-invested subsidiary is not exempt merely because its shareholders are overseas. Verify the precise entity and the scope of any exception. Meeting the percentage alone does not make an ineligible post lawful, and the representative-office exception does not remove other dispatch obligations.
4. Make the agreement match payroll and daily management
Article 59 and Interim Provisions Article 7 require a dispatch agreement covering the posts, numbers, location, term, pay and social-insurance amounts and payment methods, hours and leave, benefits during work-injury, maternity or illness periods, safety and training, compensation costs, service fees and breach liability. The dispatch term must reflect actual post needs; a continuous period of use cannot be fragmented into successive short agreements. Require records that reconcile the roster, attendance, payroll, contributions and vendor invoices instead of relying only on an invoice marked service fee.
The agency’s employer role does not remove the user entity’s Article 62 duties: working conditions and protection, information on work requirements and pay, overtime pay, performance bonuses, post-related benefits, necessary job training and normal wage adjustments for continuous use. Article 63 requires equal pay for equal work and the same remuneration-distribution method for comparable posts; where there is no comparable employee, refer to local pay for the same or similar work. Agree who supplies and checks each record without purporting to waive worker rights.
5. Review return grounds before signing an exit clause
Returning a worker to the agency is distinct from terminating the worker’s labor contract. Check the actual ground under Article 65 and Interim Provisions Article 12, then the special protections in Article 13. In particular, Article 13 restricts return on the Article 12(1)(1) grounds during dispatch for workers in Labor Contract Law Article 42 circumstances, and requires extension at dispatch expiry until the relevant circumstance ends. A vendor promise of return at will cannot displace these rules. Termination and any economic compensation require a separate assessment.
Before approval, assemble the agency licence and registrations, proposed contracts and dispatch agreement, post-eligibility evidence, entity headcount calculation, pay comparators, contribution-verification plan and return procedure. Identify who corrects a shortfall and preserves evidence. Under Article 92, where the user entity causes harm to a dispatched worker, it and the agency bear joint and several compensation liability; a private indemnity is not a shield against the worker’s statutory claim. For an initial review, provide a non-confidential outline of the China entity, city, posts, direct and dispatched headcount and planned start date, then arrange secure review of personnel records.
Legal sources
Official sources · Checked 2026-10-10. Translations are for reference and are not official legal texts.
- PRC Labor Contract Law (2012 amendment) ↗
Articles 57–59, 62–63, 65–67 and 92: licence, agreement, user duties, equal pay, return, eligible posts and liability.
- Interim Provisions on Labor Dispatch, MOHRSS Order No. 22 ↗
Articles 3–4, 7, 12–13, 25 and 27: post procedure, headcount, agreement, return protections, exceptions and actual dispatch under another label.
General information about mainland China. The facts, applicable dates and local rules require individual review.
Partner, Beijing ChangAn Law Firm
China-qualified since 2019 · Beijing & Shenzhen
Review a China labor-dispatch proposal
Check the agency, posts, headcount and allocation of duties before approving the staffing arrangement.
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