Under certain circumstances, there is no way around using a staffing firm. The resident representative office of a foreign company, for example, cannot directly hire Chinese employees in China, and so their employment relationships must be retained through a staffing firm. The staffing firm officially employs those persons selected by the representative office, and these employees are then seconded (dispatched) to the representative office under a staffing- or secondment agreement between the staffing firm and the representative office. To close the triangle, the representative office can (and should!) sign a supplementary agreement directly with the employees to detail certain conditions to their work.
Talent Spot analyze these relationships in more detail:
a. Rights and obligations between the staffing firm and the employee
The relationship between
the staffing firm and the employee is one of employment, but it is different
from traditional employment relations because the employment and the actual
labor services are separated. As per article 59 of the PRC Labor Contract Law,
this employment falls into the category of labor contract relationship, under
which the
staffing agent shall assume the obligations as employer according to law.
b. Rights and obligations between the staffing firm and the representative office
The staffing firm and the representative office have a civil contractual relationship, with rights and obligations agreed in the staffing agreement. In terms of actual legal activities, the rights and obligations of respectively the staffing firm and the representative office are effective and binding on these parties. This means that an employee’s right of claim against either the staffing firm or the representative office isnot curtailed by the staffing agreement between these two parties.
c. Rights and obligations between the representative office and the employee
There is no employment
relationship between the employee and the representative office, even though
the employee provides labor services to the representative office.
According to the Article 62 and 63 of PRC Labor Contract Law, the
representative office shall provide safe and healthy working conditions and
work protection, equal pay for equal work, benefits appropriate for the job
position, a wage not lower than the legal minimum wage standard, etc. In
breach, the staffing firm and real employer shall assume joint and several
liabilities by law, a responsibility which cannot be mitigated.
Any commitments of the employee to the real employer, on the other hand, should be fixed in writing. To this end, the representative office will often sign a supplementary agreement with the employee, which deals with work discipline (working hours, reporting etc) and the employee’s obligations on confidentiality, non-compete and nonsolicitation – terms that in a direct employment relationship are usually included in the employment contract. As contractual terms agreed between the parties, these will be binding upon the parties as per the said contract, giving the representative office a legal basis to terminate a secondment based on breach, or to claim against a (former) employee for damages.
