Companies face increased labor costs after new hiring regulations come into effect this month, the Financial Times reported Wednesday, citing employment lawyers.
The new policy imposes strict limits on the use of workers hired through outside agencies.
These agencies have been supplying workers to many companies wishing to escape the higher costs associated with China’s landmark 2008 Labor Contract Law.
Such workers are technically employed by an agency that deploys them to another company.
China has more than 60 million agency workers, accounting for about 8 percent of its active labor force, the report said, citing the state-sanctioned All China Federation of Trade Unions.
Under the Labour Contract Law, workers who complete two fixed-term contracts must be offered open-ended employmet, after which it can be difficult to fire them.
“Companies can only terminate employees [on open-ended contracts] for specific reasons allowed by the law,” Gordon Feng, a Shanghai-based employment lawyer with Paul Hastings, told FT.
Many companies, including foreign multinationals and Chinese state firms, turn to agency workers to get around the costs associated with hiring employees directly.
Agency workers are commonly employed on assembly lines, in call centres and in front line positions such as bank tellers, the report said.
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