China’s Updated Employee Dispatch and IP Protection Policy

Labor dispatch is the most preferable option when it comes to employing temporary workers. Protecting your IP is extremely important when doing business in China. China has recently shown considerable efforts in creating better employee dispatch and stronger intellectual property rights.

China Labor Dispatch

For foreign entities in china looking to cut down costs and incorporating a flexible hiring process, labor dispatch is the most viable option to hire employees in China. Labor dispatch is the most preferable option when it comes to employing temporary workers to support a business or to meet the needs of staffing a short-term project with a demanding deadline.

Labor dispatch is generally regulated by Section 2 of the PRC Labor Contract Law. And on January 24, 2014, China’s Ministry of Human Resources and Social Security (MOHRSS) promulgated the “Interim Regulations on Labor Dispatch” (MOHRSS Order No. 22, hereinafter referred to as the “Interim Regulations”) to limit companies from taking advantage of labor dispatch. The two regulations restrict what types of positions dispatched staff can hold, the proportion of workers in a company that can be comprised of dispatched staff, and how they are returned to their agencies.

 

Before an employer determines an auxiliary position in which dispatched workers will be employed, its employees’ congress or all employees shall hold discussions and provide proposals and opinions, and the employer shall negotiate with the labor union or employees’ representatives on an equal basis, and the matters concerned shall be announced internally. Article 4 An employer shall strictly control the number of dispatched workers it employed, which shall not exceed 10% of the total number of employees.

 

For the purpose of the preceding paragraph, the total number of employees refers to the sum of the number of employees with a labor contract with the employer and the number of dispatched workers the employer employed. An employer that calculates the proportion of the dispatched workers it employed refers to an employer that may conclude a labor contract with its employees in accordance with the Labor Contract Law and its Implementation Regulations.

 

China IP Protection

Protecting your IP is extremely important when doing business in China. This country has recently shown considerable efforts in creating stronger intellectual property rights (IPR) protection systems and in bringing their existing intellectual property laws in line with, or closer to, international standards.

 

  • Register your IP rights in China

IP rights are territorial; the registration or grant of a trademark, patent or design in your home country does not provide protection in China. In order to enforce your IP in China, you first need to register your IP in China. Mainland China, Hong Kong, Macau, and Taiwan all have separate legal systems. Protection in each territory requires a separate registration.

 

  • Enforcing your IP

If your IP assets are being infringed, there are four main avenues of enforcement which you can consider: a) administrative actions; b)civil litigation; c) criminal prosecution; and d) customs seizures(see Part 4 above). In many cases however private mediation via legal professionals is also very effective and should be considered as a viable option.

 

  • Registrable IPR in China

You should register your IP assets in China before entering the market, and begin the process now. China is a first-to-file (rather than a first-to-use) jurisdiction. If someone else (a competitor or even a trademark “hijacker”) registers your trademark or trade name first, you may need to buy back your own trademark.  You may face legal action or seizure if you try to use it.

 

China has recently shown considerable efforts in creating stronger intellectual property rights (IPR) protection systems. When the US and the European SMEs enter these markets, there are some key points to look out for to ensure their IP is effectively protected.

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