Lufa Case [2026] 077

  As a common form of employment, labor dispatch is, to a certain extent, beneficial for enterprises to optimize human resource allocation and promote employment. However, it can also easily lead to labor disputes due to unclear delineation of responsibilities and poor management coordination, affecting the protection of workers' legal rights. If disputes arise, how should the responsibilities of the dispatching unit and the employing unit be clarified? Please see this issue's case study.

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Case Summary

A certain human resources company is a labor dispatch unit. In May 2022, the company signed a labor contract with Zhao, establishing a labor relationship. Afterward, the company successively dispatched Zhao to work at other companies. Zhao's actual work units were Company A from May 2022 to October 2023, and Company B from November 2023 to January 2025. From May 2022 to December 2024, Zhao's social insurance was paid by an affiliated company of the staffing company.

In January 2025, the human resources company sent Zhao a "Notice of Termination of Labor Contract," citing the elimination of the position at Company B as the reason, thereby terminating the labor relationship between the two parties. After Zhao filed a labor arbitration application, the Labor and Personnel Dispute Arbitration Committee decided not to accept his application. Dissatisfied with the arbitration decision, Zhao filed a lawsuit against the human resources company, Company A, and Company B in the Huaiyin District Court of Jinan City, requesting that the human resources company pay him compensation for the unlawful termination of the labor contract, wages for paid annual leave, and summer heat relief benefits; he also requested that Companies A and B bear joint liability.

The staffing company argued that the plaintiff was an employee dispatched to the employing units, and due to structural adjustments in the employing units, the dispatched position was eliminated, resulting in significant changes to the objective circumstances on which the labor contract was based and making performance of the contract impossible; therefore, the company should not be held responsible.

Companies A and B jointly argued that in this case, the plaintiff established a labor relationship with the staffing company and signed a labor contract with it. During the period the plaintiff worked at their respective companies, he was dispatched by the staffing company. The respective companies were the employing units and did not commit any fault during employment, and thus do not bear the relevant responsibilities claimed by the plaintiff.

Court trial

After trial, the court held that neither a certain human resources company nor the employing company B was able to provide evidence regarding the fact of the position being eliminated. Even if the change in objective circumstances claimed by the human resources company existed, the company also failed to provide evidence proving that it had negotiated with Zhao regarding the modification of the labor contract. The contract was terminated after providing Zhao thirty days' advance notice or an additional month’s salary in the event of a failure to reach agreement in negotiations. Therefore, the human resources company’s act of notifying Zhao of the termination of the labor contract was illegal, and it should pay Zhao compensation for the unlawful termination of the labor contract.

Regarding the issue of liability of the labor dispatch unit and the employing unit, Article 92, Paragraph 2 of the Labor Contract Law of the People's Republic of China stipulates: 'If a labor dispatch unit or an employing unit violates the provisions of this law concerning labor dispatch, the labor administrative department shall order rectification within a time limit; if the rectification is not made within the time limit, a fine of not less than 5,000 yuan but not more than 10,000 yuan shall be imposed, and for labor dispatch units, the labor dispatch business permit shall be revoked. If the employing unit causes damage to the dispatched worker, the labor dispatch unit and the employing unit shall bear joint and several liability for compensation.' According to this legal provision, in the event that a worker suffers damage due to the employing unit’s reasons, the labor dispatch unit and the employing unit bear joint and several liability.

In this case, the human resources company’s obligation to pay Zhao compensation for the unlawful termination of the labor contract arises from the company’s failure to express its intention to terminate the labor contract to Zhao in accordance with legal conditions and procedures. The existing evidence does not prove that, at the time of the termination of the labor contract, it was due to the employing company B at that time that the termination of the labor contract was illegal. At the time of the contract termination, Company A was also not Zhao’s employing unit. Therefore, Zhao’s request for Company A and Company B to jointly assume joint and several liability for the human resources company’s debt to pay compensation for unlawful termination of the labor contract lacks factual and legal basis, and the court does not support it.The first paragraph of Article 62 of the Labor Contract Law of the People's Republic of China stipulates: "The employer shall perform the following obligations: (1) implement national labor standards and provide corresponding working conditions and labor protection; (2) Inform the dispatched workers of their work requirements and labor remuneration; (3) Pay overtime pay and performance bonuses, and provide welfare benefits related to the job; (4) Conducting training necessary for the job of the dispatched workers; (5) For continuous employment, the normal wage adjustment mechanism shall be implemented. "In accordance with the above laws, the employer shall implement national labor standards, provide corresponding working conditions and labor protection, and provide welfare benefits related to the job. The employer shall implement the national labor standards and arrange for workers to rest and leave in accordance with the national laws and regulations on rest and leave. In this case, Zhao's employer Company B in 2024 and 2025 did not arrange paid leave for those two years and did not pay him the 2024 heatstroke prevention and cooling fee. Zhao has the right to require Company B to pay him unused paid annual leave wages and remuneration for heatstroke prevention and cooling in 2024. A human resources company, as a labor dispatching unit, shall be jointly and severally liable for the damage caused by the employing unit Company B.
In summary, the court ruled in accordance with the law that a labor company paid Zhao compensation for illegal termination of the labor contract; Company B paid Zhao the untaken paid annual leave salary and heatstroke prevention and cooling fee, and the human resources company was jointly and severally liable for the above-mentioned payment obligations undertaken by Company B; Zhao's claim against Company A was dismissed.

Judge's statement

In labor disputes, there has long been a problem of unclear responsibilities and mutual shirking in the field of labor dispatch: the employer refuses to assume labor protection, remuneration payment and other responsibilities on the grounds that there is no labor relationship; The labor dispatch unit refuses to take responsibility under the pretext of the actual management of the employer, resulting in workers falling into the dilemma of "finding no one at both ends" when defending their rights, and it is difficult to protect their legitimate rights and interests in a timely manner.
Article 92 of the Labor Contract Law stipulates that the labor dispatching unit needs to be jointly and severally liable for the damage caused by the employer to the dispatched worker, so as to avoid the labor dispatching unit "only dispatching and ignoring" or the employer "only using but not protecting". In accordance with the provisions of Articles 62 and 92 of the Labor Contract Law, and with reference to Article 14, Paragraph 2 of the Measures for the Implementation of Paid Annual Leave for Enterprise Employees, the judgment ruled that the labor dispatching unit was jointly and severally liable for the damage caused by the employer's failure to arrange rest and leave for workers and failed to pay heatstroke prevention and cooling fees.
This article is transferred from the WeChat public account "Shandong High Law", and I would like to express my gratitude!