Article 63 Paragraph 2 of PRC Employment Contract Law(“ECL”) give rise to the confusion of whether a company may return the dispatched employee to temp agency on the ground that the objective circumstances relied on at the time of the conclusion of the engagement contract(please note that is not employment contract) between the company and the dispatched employee have materially changed, which make performance thereof impossible and the company and the dispatched employee fail to reach agreement on amending the engagement contract after consultations.
Article 63 Paragraph 2 of ECL says if a dispatched employee is characterized by any of the circumstances set forth in Article 39 or Item (1) or (2) of Article 40 hereof, the company which engages the dispatched employee may return him/her to the temp agency and the temp agency may terminate his/her employment contract in accordance with the relevant provisions hereof. Article 63 does not clearly stipulate whether the company may rely on Item (3) of Article 40, namely a material changes to the objective circumstances relied on at the time of the conclusion of the engagement contract between the company and the dispatched employee, to return the dispatched employee to temp agency.
Thus, there are two different opinions on whether a company may return the dispatched employee to temp agency relying on the ground of a material changes to the objective circumstances. Some believe that the company is not allowed to do so because Article 3 Paragraph 2 of ECL provides for only three scenarios as stipulated by Article 39 and Item (1) or (2) of Article 40 where a company may return the dispatched employee, while some believe that Article 3 Paragraph 2 of ECL should not be interpreted to exclude the company’s right from returning the dispatched employee in scenario of a material changes to the objective circumstances occurring because Article 3 Paragraph 2 of ECL does not explicitly prohibit a company from doing so.
Shanghai court supports the latter opinion. Shanghai Intermediate Court ruled, in a lawsuit brought by a dispatched employee to his company in 2010, that “ Article 3 Paragraph 2 of ECL only excluded a temp agency’s right from terminating its labor relationship with the dispatched employee under other circumstances which are not set forth by Article 39 or Item (1) or (2) of Article 40 of ECL, ’’ and, “ as the purpose of placement is to have a company enjoy more flexibility in hiring an employee, Article 3 Paragraph 2 of ECL should not prevent a company from terminating its engagement relationship with a dispatched employee and returning him/her to temp agency under a circumstance which is not set forth by Article 39 or Item (1) or (2) of Article 40 of ECL, otherwise it would not be in line with the original intention of lawmaker establishing placement system. ”
Thus, we can come to conclusion that a company may return the dispatched employee to temp agency relying on the ground of a material changes to the objective circumstances.
By Adam Li