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solution providers

There is a new law significantly impacting employer s who do not directly employ their own workers, but instead use agencies such as FESCO or third party staffing companies, also known as labour dispatching agencies. At the end of 2012, the Standing Committee of the National People’s Congress adopted the Decision on the Revision of the Labour Contract Law of the People’s Republic of China (“Amendment”). The Amendment has initially taken effect from July 1st 2013. The intent of the Amendment is to offer better protection to workers employed by labour dispatching agencies.

It is the practice of some Umbrella Companies to offer inducement allowances to sales consultants to procure contractor business for them. I often get asked if this is a problem from an agency point of view. There are a number of reasons why I think that it should be a strict policy within agencies to proscribe this activity and to ensure that consultants do not accept these external commissions:

In the last six years or so, there have been at least four instances of well known umbrella companies being forcibly put into receivership or voluntarily filing for administration. These incidents caused a massive amount of upheaval among agencies and contractors. Many contractors did not get paid in the final month of active business for the "solution provider" and some were unlucky enough to lose two month's income as a result of the sudden closure of the business.

"Give me solutions, don't give me problems". This is a common mantra from many agencies when dealing wiith suppliers. The imperative to keep a prospective contractor happy conquers most other considerations when seeking to complete a placement. The general term now used by the industry for International Umbrella or Management Companies is "Solution Provider". However, it is important that agencies should tread with care here. Otherwise, your short term "Solution Provider" could become your long term "Problem Provider".

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