Advantages and Benefits of Labor Dispatching

The adoption of the labor dispatching system enables employers to embrace a new employment philosophy: 'Not seeking ownership, but seeking utilization'. The employer only signs a labor dispatching agreement with the labor dispatching agency, which then assigns suitable personnel to work at the employer’s premises. The employer is solely responsible for the use of workers and maintains no subordinate employment relationship with them. Characterized by the principle of 'Not seeking ownership, but seeking utilization', labor dispatching is particularly suitable for non-public enterprises, restructured state-owned enterprises, and organizations subject to rapid business changes whose talent requirements vary across different development stages.

'You use the staff; we manage them' is another prominent feature of talent dispatching. This employment model creates three types of relationships, with the talent dispatching agency acting as the intermediary: the subordinate relationship between the dispatching agency and dispatched employees, the cooperative relationship between the dispatching agency and the employer, and the working relationship between dispatched employees and the employer. Clearly, the employer only manages staff deployment and on-the-job performance assessment. All remaining administrative work, including payroll distribution, social insurance contributions, labor contract signing, renewal and termination, handling of disputes, and routine human resources administration, falls under the responsibility of the dispatching agency. Under this arrangement, the employer uses workers while the dispatching agency manages them. This model greatly reduces the employer’s HR workload and associated troubles, allowing business managers to focus on corporate development, production and operations.

Labor dispatching agencies act as a bridge connecting both parties, facilitating two-way selection between labor supply and demand and safeguarding the rights, obligations and interests of all stakeholders. This constitutes a fundamental advantage and unique mechanism of the labor dispatching system.

The implementation of labor dispatching across China was initially launched by labor service departments affiliated with governments at all levels. It represents an extension of job placement services within the labor service industry. Conventional labor agency services operate as an external service provider separate from labor supply and demand. Once labor agency services evolve into labor dispatching, a qualitative change occurs: the agency becomes an internal participant in the employment relationship.

Firstly, qualified labor dispatching agencies must be approved by competent government authorities. They are legal entities granted a special license to conduct labor dispatching business. Positioned between labor suppliers and employers, the dispatching agency performs two core duties. On the one hand, in accordance with the employer’s workforce requirements and the signed labor dispatching agreement, it recruits and assigns qualified workers promptly and manages dispatched staff to effectively protect the employer’s rights, obligations and interests. On the other hand, prior to deployment, the agency signs labor contracts with dispatched employees to establish a formal subordinate relationship and guarantee the employees’ rights, obligations and interests during their assignment. This special function distinguishes labor dispatching agencies from other corporate entities.

To operate such specialized services properly, labor dispatching agencies must always serve both sides of the employment relationship and balance the rights, obligations and interests of all parties. Through standardized and rigorous operations, they gain recognition from labor suppliers and employers, and foster sound development of the labor dispatching system supported by solid social credibility.

This benefit of labor dispatching carries special significance for individual workers, who are often in a disadvantaged position. In some cases, employers may also be the vulnerable party. Labor dispatching can serve as an ideal solution for both talent suppliers and employers to prevent impairment of the rights, obligations and interests of the potentially disadvantaged side.

Against the backdrop of China’s accession to the WTO, enterprises need effective human resource management to achieve the following goals to cope with intensifying domestic and international market competition and maintain or build core competitive advantages:

1. Scientific and rational staffing and formulation of effective compensation policies;
   
2. Comprehensive improvement of employee quality through training;
   
3. Reform of management models to minimize the costs and risks of human resource utilization.
   

Advantages of Labor Dispatching

1. Lower employment expenditure

When calculating total expenditure for dispatched personnel, employers consider post efficiency, set wage standards based on market rates, and avoid additional unplanned costs for dispatched staff. Special invoices for labor dispatching can be counted as pre-tax operating costs for employers. Overall comprehensive costs are far lower than those for permanent in-house employees.

2. Convenient and professional human resources administration

According to industry experts, employers are not restricted by household registration or academic qualifications when hiring dispatched staff. They formulate internal management rules, leverage employees’ capabilities and conduct performance assessments based on assigned tasks. Specific HR administrative work is undertaken by the labor dispatching company. Employers can flexibly scale up staffing during business expansion and cut headcount when business shrinks, achieving highly agile workforce management.

3. Fewer labor disputes

Guided by relevant Chinese laws, regulations and policies, the employer signs a dispatching service agreement with the dispatching agency, while the dispatching agency signs labor (employment) contracts with dispatched employees. The employer only maintains a paid-use relationship with dispatched staff. This structure helps the employer avoid potential labor disputes arising from direct employment relationships with dispatched workers.