What are the regulatory requirements for the provision of placement or recruitment services in the PRC?

A service provider seeking to provide placement and/or recruitment and other human resource agency services must fulfil the following requirements:

  1. obtain the relevant approval from the local Human Resource and Social Security Bureau; and
  2. file such approval with the local Administration of Industry and Commerce (AIC) to apply for a business license based on such approval.

What is the most usual practical difficulty with using a placement/recruitment service?

Sometimes the contractual arrangement between the service provider and the employer provides that the service provider will find a replacement for any individual originally placed by the service provider whose performance turns out to be unsatisfactory to the employer.

The enforceability of such clause is questionable because the relevant individual is an employee of the employer and any termination of such employee will be subject to PRC restrictions on the termination of employment.

Are there any legal regulations of payroll service providers (who process salary payments, social insurance calculations and similar employee benefits on behalf of an employer) in the PRC?

Generally no. The payroll service provider must be approved by the local AIC to include the relevant service items in its scope of business.

If you are interested in receiving our "PRC Labour Law - Bitesize" articles, or if you have any questions on PRC employment law, please email to bitesize@mayerbrown.com to register.