Chinese Scholar: Labor-Service Agencies Should Not Be Used to Circumvent Labor Contract Rules

Problems have arisen in China as employers turn increasingly to labor-service agencies (laodong fuwu) to find workers. In an article posted on the Ministry of Justice Web site, reporter Zhong Angang describes how these agencies serve as the middlemen or intermediate agencies in the labor relationship. They sign contracts directly with workers, collect wages and social security payments from the employers, pay wages to the workers, and deposit the social security payments in the relevant government office. Workers who use labor-service agencies include domestic servants, construction workers, coal miners, and white collar workers in such industries as banking and insurance.

Zhong Angang sees a number of problems with the labor-service system: (1) if there is a conflict between the worker and the employer, the agency has no defined responsibility to resolve the dispute; (2) if workers' legal rights are infringed by the employer, there is no obligation on the part of the agency to advocate on the workers' behalf; and (3) some agencies have not intervened when the employing company has exploited workers.

Professor Ye Jingyi of Beijing University Law School warns that unless the labor-service agency system is controlled, it may become the most common form of employment relationship, replacing regular labor contracts. Professor Ye recommends that the labor law should be more specific as to the responsibilities of the agencies.