What are “Shared Employment” and “Platform Employment”?

“Shared Employment” (“SE”) and “Platform Employment” (“PE”) become very popular in recent years. They are always mentioned as a method to reduce labor cost in social Medias. However, many enterprises donot have a comprehensive picture of the two, such as the employment model, the difference from normal employment, and relevant risks.

Let’s talk about the “SE”. At the beginning of 2020, due to the epidemic, the majority enterprises had to suspend operation, especially those enterprises in the catering and tourism industries, at the same time, manufacturers of anti-epidemic products, logistics enterprises and a few enterprises which could and must operate during this special period were lack of labor. “SE” emerges. Specifically, enterprises with surplus labor arranged employees to work for enterprises which were lacking of labor, the latter bears relevant wages and social security expenses, and the former should not obtain additional benefits. On September 30, 2020, the “Notice of General Office of Ministry of Human Resources and Social Security on Proper Guidance and Services for Employment Sharing” (Ren She Ting Fa [2020] No. 98) prescribes guidance on the labor relationship, social security, work related injury, labor dispute resolution and etc.. From then on, “SE” has its policy basis. Therefore, the essence of “SE” is a temporary employment method, in which enterprises with surplus labor arrange employees to work for enterprises which are lacking of labor, the labor relationship has not been changed, and the employers could not obtain additional benefits. After the epidemic, if any enterprise has a low-peak season, it could cooperate with those enterprises with staggered low-peak season.

Another model is the “PE”, which is a flexible employment method starting from the takeaway platforms. The takeaway platforms mainly have three operation models: 1) service outsourcing; 2) regional franchising; and 3) platform intermediation. Regarding 1) and 2), a platform would sign a contract with an outsourcing company, or franchising company, which establishes the labor relationship with riders. For 3), the transaction subjects are the consumer and the rider, the platform just provides a media for a consumer to release a task, and a rider to get a task, in this model, the rider has not established a labor relationship with either the consumer or the platform. The rider just gets a task via the platform, and obtains a fixed payment or a commission from the consumer upon the completion of the task. The essence of 3) is the service outsourcing. In practice, online teachers, KOLs have further promoted the development of the “PE”. The “Opinions on Supporting Sound Development of New Business Forms and New Modes, and Activating the Consumer Market to Drive and Increase Employment” (FA GAI GAO JI [2020] No.1157) was jointly issued by the National Development and Reform Commission and other departments on July 14, 2020. This policy encourages entities and individuals to outsource service via internet platforms, by which the entrepreneurship and sidelines innovation could move forward. This is the policy basis for the “PE”.

In addition, in consideration of the arrangement of individual income tax, or the arrangement of labor relationship, many platforms would require individuals to register as an Individual Industrial and Commercial Household (“IICH”). As a feature of the “PE” is that there is no labor relationship between individuals (especially those who have registered as an “IICH”), in practice, in order to reduce the labor costs or avoid relevant risks, some enterprises would request candidates, or ex-employees who have been requested to terminate the labor contract, to register on such platform and get tasks. However, if an individual could prove that he has the HR management relationship with the enterprise, abides by the enterprise’s rules and regulations, enjoys employee’s benefits and etc., then the enterprise would highly possible be deemed as having established a de facto labor relationship with such individual.