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4.3.1     Types of positions

Under the PRC Labour Contract Law companies are only allowed to engage indirect hires through staffing firms for positions meeting one of the following requirements listed below:

• Temporarily employees, which includes staffs to be engaged for a maximum period of six months or less.
• Substitute employees, to replace direct hired employees for a certain period of time who are temporarily unable to work; and
• Auxiliary employees, positions in non-core business activities which support service core-businesses.

Regarding auxiliary positions, at present no definition for non-core business activities exists. According to regulations companies must decide internally, upon consultation with its employees of their representatives and trade union, on its definition.

4.3.2     Maximum number of dispatched employees

The regulations further stipulate that the total number of indirect hires dispatched at a company are not allowed to exceed 10% of the total number of employees, which includes both direct and indirectly recruited employees.

Exception to the maximum number of dispatched employees is made for Representation Offices as Representation Offices do not have a legal entity status in China and therefore are not permitted to hire staff directly. Representation Offices must continue to engage its Chinese staff through staffing agencies. Foreign nationals working at Representation Offices must be employed through an entity established outside Mainland China territory and be seconded to work in China.