As China inexorably continues increasing its restrictions on hiring personnel via third party employment agencies (sometimes referred to as FESCO companies or as staffing agencies), our China lawyers are more and more often being tasked with helping our clients move their personnel from the third party hiring company to a newly formed (0r even existing) WFOE.
The usual procedure for moving an “employee” from a third party hiring company to a WFOE is as follows:
- Terminate the contracts with the hiring agency. Terminate the contract between your company and the hiring agency and terminate the contract between the hiring agency and your “employee.”
- Upon resignation, the employee is IMMEDIATELY hired by the WFOE pursuant to the standard employment agreements. There is NO time gap.
- Normally, the third party hiring agency is williing to allow you to terminate your contract with them, so long as the employee voluntarily resigns, so long as you pay any fees owed to the employee and to the third party agency, and so long as you sign an agreement freeing the third party hiring agency of any liability surrounding the employee. In many cases, you will want to continue using the third party hiring agency as your outsourced payroll department to take care of the administrative side of salary payment and payment of employer/employee taxes and benefits. If you keep the third party agency on in this capacity, it will usually be delighted to terminate the employment agent relationship to move into a standard benefits processing arrangement.
- The employee will not want to lose the employee’s seniority in the employment relationship.
- The employee will not want to be placed in a setting where they are in a probation period.