China tightens loophole on hiring temporary workers

BEIJING - China amended its labour law on Friday to ensure that workers hired through contracting agents are offered the same conditions as full employees, a move meant to tighten a loophole used by many employers to maintain flexible staffing.

Contracting agencies have taken off since China implemented the Labor Contract Law in 2008, which stipulates employers must pay workers' health insurance and social security benefits and makes firing very difficult.

"Hiring via labour contracting agents should be arranged only for temporary, supplementary and backup jobs," the amendment reads, according to the Xinhua news agency. It takes effect on July 1, 2013.

Contracted laborers now make up about a third of the workforce at many Chinese and multinational factories, and in some cases account for well over half.

Some foreign representative offices, all news bureaus and most embassies are required to hire Chinese staff through employment agencies, rather than directly.

Although in theory contracted workers are paid the same, with benefits supplied by the agencies who are legally their direct employers, in practice many contracted workers, especially in manufacturing industries and state-owned enterprises, do not enjoy benefits and are paid less.

Employment agencies have been set up by local governments and even by companies themselves to keep an arms-length relationship with workers. Workers who are underpaid, fired or suffer injury often find it very difficult to pursue compensation through agencies.

Korean electronics giant Samsung Electronics Co. said in November that it would require its 249 supplier factories in China to cap the number of temporary or contracted workers at 30 per cent of regular full-time employees.

It announced the corrective measure after Chinese labour activists reported violations of overtime rules and working conditions as well as under-age workers at Samsung suppliers.

Samsung says its own audit did not find workers under China's legal working age of 16.