Who can or must use a labour secondment arrangement in the PRC?

A “labour secondment arrangement” means the hiring of employees by a third party (the “Labour Provider” such as CIIC and FESCO) to second to work for a host employer.

A PRC representative office of a foreign company, which is not permitted to directly employ PRC citizens who are permanent residents in Mainland China, must use a labour secondment arrangement to engage such employees in the PRC. Such PRC representative office of a foreign company may, however, directly engage the following two types of individuals to work in the PRC:

  1. non-PRC citizens; and
  2. Chinese nationals who are permanent residents in Hong Kong, Macau or Taiwan.

Other types of PRC entities, e.g. PRC state-owned enterprises and wholly foreign owned enterprises, which are able to directly employ PRC citizens who are permanent residents in Mainland China, may (but are not obliged to) use a labour secondment arrangement.

What categories of individuals can be employed by a Labour Provider for the purposes of secondment in a labour secondment arrangement in the PRC?

A Labour Provider can employ anyone for the purposes of secondment in a labour secondment arrangement in the PRC, except:

  1. non-PRC citizens, and
  2. Chinese nationals who are permanent residents in Hong Kong, Macau or Taiwan.

Who can be a Labour Provider in a labour secondment arrangement?

In order to be a Labour Provider the relevant entity must:

  • be approved by the local Administration of Industry and Commerce to provide the labour secondment services in the PRC;
  • be a company incorporated under the PRC Company Law; and
  • have a registered capital of at least RMB500,000.

 

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