New cap on labor dispatch workers in China

To address the growing over-reliance on temporary labor “dispatch” workers in China, the government has taken several actions to restrict the number of dispatch workers a company may employ and to clarify the definitions of the three job categories (“temporary, auxiliary, and substitute”) dispatch workers may be hired to do. As of March 1, 2016, the most recent restriction has been put in place, requiring that dispatched workers shall not exceed 10 percent of the total number of employees at a given company. All of these restrictions are intended to protect dispatch workers from performing the core work of a business without the benefits of contracted, long-term employment.

During the 2014 and 2015 factory due diligence cycles, FLA assessors found that three out of 89 factories assessed in China were using or had used dispatched labor. Assessors’ findings showed that many dispatch workers were receiving delayed or partial payment for their social insurance, and one factory was found to be paying housing provident benefits only to regular workers, and not for dispatch workers. Dispatch workers at that time averaged around 38 percent of the total workforce of the assessed factories and were widely assigned throughout the production lines with no distinction between regular job positions and temporary, auxiliary, or substitute job positions.

When brands encounter facilities employing labor dispatch workers, the FLA recommends implementing the following strategies in their workplace standards monitoring programs:

Monitor whether workers must pay a recruitment fee, and stop the practice if it is found.
Monitor the proportion of dispatched workers, and if it exceeds the legal limit of 10 percent, develop a time-bound action plan to reduce the dispatch worker proportion to within the legal limit.
Monitor whether dispatch workers are placed in the temporary, auxiliary or substitute positions only, and review how facilities define the three positions in their written policies and procedures.
Monitor to ensure that dispatch workers receive equal pay for equal work, and that dispatch workers’ mandatory social benefits are paid.
Communicate to facilities that industrial relations with dispatch workers should be the same as with regular workers.

New cap on labor dispatch workers in China

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