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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China’s Employment Contract Law MNCs Must Know

Within China, rapidly changing demographics, rising incomes, increased consumer spending and an increasingly open business environment have all helped to make the Chinese market increasingly attractive to Western businesses across a variety of industries. Lacking the appropriate knowledge and a broad enough professional network can be a hindering factor that may make it difficult to overcome the barriers encountered when doing business in China.

There are many opportunities that foreign companies can take advantage of, including the large and fast-growing domestic market, an improving institutional environment, various investor-friendly policies in regional and centrally controlled special economic and high-tech development zones, an ever improving quality of human resources and better infrastructure. While it is true that China represents a huge potential market for foreign manufactured goods and services, it is also the case that understanding where these opportunities lie and how to access them can be extremely challenging.

The Development of Labor Law in China

As China moved from a planned economy to a more market-oriented one during the reform era, the government gradually introduced a broad range of legislation to regulate labor relations and stipulate the rights and obligations of both employers and employees. The aim of much of this legislation was to bring China into line with international standards and facilitate the country’s entry into and participation in global economic entities such as the World Trade Organization. China is not an at-will-employment jurisdiction. All China employees must be employed pursuant to a written employment contract and during the term of that contract, it is difficult to terminate them. If an employer wants to terminate an employee before his or her employment term ends, it can do so only for cause and cause must be clearly proven.

China Employment Contract

An employer establishes labor relationship with a worker as of the date of start to use the worker. It shall set up a roll of workers for reference. When hiring the workers, the employer shall faithfully notify them of the job contents, conditions and place, occupational harm, work safety status, remuneration, and other information as required by the workers. The employer is entitled to be aware of the basic information in direct relation to the workers and the labor contracts, and the workers shall provide such information authentically. Remember that employee terminations are usually very difficult in China because the employer must prove that its termination was legally permissible and that is often not an easy task. So, what happens when you wish to terminate an employee who has worked a couple of years but still has a few years left on the employment contract and you do not have any legal grounds for the termination. If an employer forces an employee to work by force, threat or unlawful restriction of personal freedom, or if an employer violates safety regulations to instruct or compel an employee to perform hazardous activities that endanger the employee’s private life the employee may terminate the employment contract immediately without prior notice to the employer.

Chinese employment law provides comprehensive and stringent rules covering everything from hiring to termination, and there is little room for the parties in an employment relationship to create new mechanisms in addition to these statutory mechanisms. Multinational corporations must localize their global employment policies and relevant practices in view of the special requirements of Chinese employment law.

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