How China EOR Arrangements Relate to Labour Dispatch

Reviewed by Janey Fan (范军), International Payroll & Tax Specialist, CHRO Certificate

Employer of Record, or EOR, is a commercial service name. Chinese employment legislation does not define an employment category called EOR. A proposal therefore cannot be assessed from the label alone. The useful questions are which Chinese entity will sign the labour contract, who will direct the employee's work, what the services agreement says, and whether the arrangement uses licensed labour dispatch.

Labour dispatch is one possible structure that may sit behind a service marketed as China EOR, but it is not the legal basis for every EOR proposal. It is a separately regulated arrangement with a permit requirement, a defined relationship between the dispatch agency and the receiving unit, and restrictions concerning roles and headcount.

This article explains those dispatch rules and the documents a buyer should request. For a broader comparison of PTM, managed HR, EOR and labour dispatch, read EOR vs PEO in China. If you are already evaluating a commercial service, the China EOR and PEO service page describes Out2China's service scope.

The short answer: is China EOR the same as labour dispatch?

No. EOR is a market label; labour dispatch is a regulated arrangement under the Labour Contract Law and the Interim Provisions on Labour Dispatch. Some EOR proposals may use a licensed dispatch structure, while others may present a different contract and service arrangement. The actual documents and working relationship determine what must be reviewed.

Under labour dispatch, the dispatch agency is the employing unit and signs the labour contract. The receiving unit uses the worker and has duties set out in the dispatch rules. The dispatch agency must hold a Labour Dispatch Operation Permit.

A proposal described as direct employment by a provider needs its own review. A Human Resources Service Licence or filing describes authorised or recorded HR-service activities; it does not by itself determine the legal character of an arrangement in which another business directs the employee's daily work. The parties should examine the labour contract, services agreement, actual management arrangements and relevant registrations together.

EOR is a commercial label, not a PRC statutory category

Buyers often assume that EOR identifies one standard legal structure used by every provider. In China, that assumption can hide important differences between proposals.

The Interim Regulations on the Human Resources Market distinguish between licensed job-intermediary activity, HR-service activities that are filed with the authority, and labour dispatch, which follows separate national rules. The regulation does not create an EOR category.

For procurement purposes, separate the commercial description from the operating structure. Ask the provider to identify:

1. the full Chinese registered name and Unified Social Credit Code of the entity signing the labour contract;
2. the service entity named in the commercial agreement;
3. which party directs hours, duties, leave, performance and workplace conduct;
4. which entity runs payroll and statutory registrations;
5. whether the provider considers any part of the arrangement to be labour dispatch;
6. which permit or filing it relies on for each part of the service.

If these answers conflict across the proposal, labour contract and services agreement, the service name will not resolve the conflict.

The legal structure behind a China EOR proposal

A provider may propose that its Chinese entity sign the labour contract while the overseas client coordinates the employee's commercial work. The documents must explain how employer decisions, daily work direction, payroll, employee relations, changes and exits will be handled. The more the operating facts differ from the written structure, the more important a China employment-law review becomes.

Where a licensed labour-dispatch structure is used, the legal roles are more specifically defined. The Labour Contract Law identifies the dispatch agency as the employing unit. The agency signs the labour contract and enters into a dispatch agreement with the receiving unit. That agreement should cover the dispatched position, headcount, term, remuneration, social-insurance amounts and payment arrangements.

Outsourcing terminology does not override the facts. Article 27 of the Interim Provisions on Labour Dispatch states that where workers are used in the form of labour dispatch under the name of outsourcing or contracting, the dispatch provisions apply. MOHRSS implementation guidance also tells authorities to guard against arrangements described as outsourcing but operated as dispatch.

This is why the article does not describe EOR as a mixture of outsourcing and labour dispatch. A company may offer different services, but the parties should identify the structure used for each employee rather than blending two labels in one contract.

Labour-dispatch permits and the two Out2China licences

Operating a labour-dispatch business requires a separate administrative permit. The Labour Contract Law also sets conditions for the dispatch agency, including minimum registered capital of RMB 2 million. A general HR-service document is not a substitute for the Labour Dispatch Operation Permit.

Current Out2China service materials identify Xin Ling Hang (Shenzhen) Management Consulting Co., Ltd. and Human Resources Service Licence No. (粤)人服证字〔2026〕第0304004823号. The same entity holds Labour Dispatch Operation Permit No. 440304000260041, valid from 4 August 2026 to 3 August 2029 and issued by the Human Resources Bureau of Futian District, Shenzhen.

These documents show the recorded permissions held by the named entity. They do not prove that every role, city or proposed EOR arrangement is automatically compliant. When dispatch is proposed, the buyer should confirm that the permit belongs to the dispatch agency named in the contract and then review the role, receiving unit, headcount and actual management process.

Which roles can use labour dispatch?

The Labour Contract Law describes direct labour-contract employment as the basic form of employment and labour dispatch as a supplementary form. Dispatch is generally limited to temporary, auxiliary or substitute positions:

The label on the job description is not enough. For an auxiliary position, the Interim Provisions require the receiving unit to discuss the proposal through the employee-representative congress or with all employees, consult the union or employee representatives on an equal basis, and announce the result internally.

A permanent leadership, revenue or core operational role may not fit these tests merely because the provider calls the arrangement EOR. The role and the way the receiving unit will use the worker need to be reviewed before a dispatch agreement is signed.

How the 10% labour-dispatch cap works

For receiving units covered by the general rule, dispatched workers must not exceed 10% of the total workforce. MOHRSS explains that the denominator consists of employees who have labour contracts with the receiving unit plus the dispatched workers used by that unit.

The calculation belongs to the receiving unit, not the provider's entire client base. A buyer should therefore ask for the proposed receiving unit, its current labour-contract headcount, its existing dispatched-worker count and the calculation after the new workers are added.

The 10% figure is not the only test. A proposal can be below the cap and still require review of the position, permit, agreement and actual management arrangement.

Why representative offices need a separate check

Article 25 of the Interim Provisions says that foreign-enterprise resident representative offices and certain other organisations that use dispatched workers are not subject to the temporary, auxiliary or substitute role tests or the 10% ratio cap.

That is a specific exception to those dispatch restrictions. It should not be expanded into a conclusion that every representative office, every worker or every EOR proposal automatically uses the same route. Representative-office status, the worker's role, nationality and local procedures can change the analysis.

If a representative office plans to engage Chinese staff, ask the proposed service provider to identify the local service route and the authority or rule on which it relies. If it plans to engage a foreign chief representative or representative, work-permit and representative-registration rules also need to be checked separately.

Seven checks before accepting a labour-dispatch structure

Before an employee starts work, ask the provider to answer these questions in writing:

1. Who signs the labour contract? Record the full Chinese entity name and Unified Social Credit Code.
2. Is this expressly labour dispatch? The services agreement and employee documents should use a consistent description.
3. Where is the permit? Confirm the permit number, holder, validity period and issuing authority.
4. Why does the role qualify? Record whether it is temporary, auxiliary or substitute, including the evidence for that category.
5. Does the receiving unit remain within the cap? Keep the headcount calculation used for the 10% test, unless a documented exception applies.
6. Who manages what? Set out day-to-day direction, attendance, leave, performance, payroll, social insurance, employee relations and exit decisions.
7. What happens if the facts change? Explain what will happen if the role becomes permanent, moves into the core business, changes city or no longer fits the documented structure.

These checks also help buyers identify a proposal that is called outsourcing but operated as dispatch. The provider should be able to explain the structure without switching terminology between sales materials and contracts.

When another employment structure may be more appropriate

Labour dispatch should not be used simply because it is available. If the planned role does not fit the dispatch conditions or the company expects to build a substantial, permanent China team, compare the proposed EOR arrangement with establishing a Chinese entity.

The right answer depends on the hiring timetable, activity in China, headcount, location, management model and long-term plan. The EOR vs WFOE guide explains the entity decision in more detail. Companies comparing vendors can also use the China EOR provider selection guide to review contracts, evidence and delivery controls.

If the team already has a Chinese employing entity, the requirement may be payroll processing or managed HR rather than another employing entity. That question belongs in the EOR vs PEO comparison, while this page remains focused on labour-dispatch rules.

Discuss the proposed employment structure with Out2China. Bring the intended role, city, headcount, start date, entity status and draft operating model. The team can identify the documents and review points that apply before a service route is confirmed.

Frequently asked questions

Is every China EOR arrangement labour dispatch?

No. EOR is a commercial service name, while labour dispatch is a separately regulated structure. Some proposals may use licensed dispatch, but the labour contract, services agreement, actual management and relevant permits must be reviewed before the arrangement is characterised.

Is EOR in China a mix of outsourcing and labour dispatch?

That is not a useful way to document one employee's arrangement. Outsourcing and labour dispatch are assessed through different operating facts. A provider may offer both services, but the contract and working process should identify which structure applies to the employee.

Who is the employer in a labour-dispatch arrangement?

The dispatch agency is the employing unit under the Labour Contract Law and signs the labour contract. The receiving unit uses the worker and has separate statutory and contractual duties.

Does a Human Resources Service Licence cover labour dispatch?

Not by itself. Labour dispatch requires a separate Labour Dispatch Operation Permit. The documents held by a provider also do not remove the need to review the proposed role and operating arrangement.

Which positions can use labour dispatch?

Under the general rule, dispatch is a supplementary form of employment for temporary, auxiliary or substitute positions. The position must meet the relevant definition and the receiving unit should keep the supporting record.

Does the 10% cap apply to a foreign representative office?

Article 25 of the Interim Provisions exempts foreign-enterprise resident representative offices that use dispatched workers from the role tests and the 10% ratio cap. Other requirements and local procedures still need to be checked.

What should a buyer ask a China EOR provider to disclose?

Ask for the employing entity's registered details, the contract structure, the permit or filing relied upon, the intended management split, statutory-registration route and, if dispatch is proposed, the role analysis and headcount calculation.

Primary official sources

• Labour Contract Law of the People's Republic of China
• Interim Provisions on Labour Dispatch
• MOHRSS explanation of the Interim Provisions, including the 10% calculation
• MOHRSS implementation notice on preventing disguised labour dispatch
• Interim Regulations on the Human Resources Market
• Supreme People's Court Interpretation (II) on labour disputes

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