A News Story, and a Phrase I Know Too Well
A primary school in Guangzhou put out a posting for “shadow teachers”—no salary, no room and board. The school’s explanation: it’s a “teaching talent reserve.”
The lawyer’s take: if the arrangement meets the legal elements of an employment relationship, it may be recognized as one.
I read that news item twice. The first time I was thinking “they can get away with that.” The second time I was thinking “I’ve heard that wording before.”
“Reserve,” “training program,” “internship,” “partnership,” “flexible staffing”—all of these words have one thing in common: they are translations of “I am using you” into “I am not using you.” Once the translation succeeds, the cost of employing a person vanishes—and the liability vanishes right along with it.
A position, as long as it isn’t called a position, no longer needs a wage, social insurance, capped working hours, or severance. This isn’t wordplay; it’s bookkeeping. The same person doing the same work—whether the books log it as “personnel cost” or as “training expenditure”—that’s what decides whose problem they become when something goes wrong.
I’m Outsourced Too, and My Contract Says Three Hundred Thousand
Let me start with myself.
I’m an outsourced worker. My salary is a bit over ten thousand yuan a month, and my benefits are at least half of what a regular employee gets. My contract isn’t with the company where I actually work; it’s with a staffing firm. But what time I arrive, what I do, who evaluates me, when I’m allowed to leave—all of that is decided by the client company.
And there’s one clause in the contract: violate the rules, pay three hundred thousand in damages.
Three hundred thousand—that’s thirty months of my salary. When I signed, I stared at that number for a while, then put my signature underneath it. Not because I accepted it, but because without the signature there was no job.
One thing was clear to me even then: that number wasn’t calculated, it was designed. It doesn’t need to be reasonable; it only needs to be big—big enough that every time I want to speak up, I first do the math on whether I could afford to pay.
That Piece of Paper Is Almost Certainly Void
Later I went and actually read the statutes, and what I found was pretty ironic: that three hundred thousand, most likely, I would never owe a single yuan of.
Article 25 of the Labor Contract Law of the PRC is written about as tight as they come: apart from the two situations defined in Article 22 and Article 23, an employer may not agree with a worker that the worker bears a penalty for breach.
- Article 22 is the service period. The precondition is that the employer spent dedicated training expenses on you—real professional and technical training. The penalty may not exceed those training costs, and may not exceed the portion attributable to the unfulfilled part of the service period. Note: onboarding training, pre-job orientation, the “senior trains junior” kind—those generally don’t count.
- Article 23 is the non-compete. And Article 24 fences in who it can even apply to: senior management, senior technical personnel, and others with confidentiality obligations; two years at most; and the company must pay compensation monthly throughout the non-compete period. A non-compete signed by an ordinary worker doesn’t hold up to begin with.
And if the company doesn’t write “penalty” but instead writes “compensation for losses,” that’s a different road entirely: the employer has to prove the actual loss itself. Plus Article 16 of the Interim Provisions on Payment of Wages caps it—if a worker causes economic loss through their own fault, the employer may deduct from wages, but the monthly deduction may not exceed twenty percent of that month’s wage, and what’s left may not fall below the local minimum wage.
In other words, even if they won, they couldn’t take three hundred thousand in one go. They could only claw two thousand out of my ten-thousand-yuan paycheck, month by month.
One more aside: a lot of companies love the word “fine.” Employers have no power to fine employees—the Regulations on Rewards and Punishments for Enterprise Employees was abolished in 2008, and since then there has been no administrative-law basis for a company fining its staff.
So what is this piece of paper, legally? It’s a document written to be terrifying, but hemmed in at every turn when it comes to enforcement.
What It Sells Isn’t Compensation—It’s Fear
Once I’d worked this out, I actually felt worse.
Because the clause never needs to be enforced. It only needs to be believed.
The real force of a clause like this doesn’t lie in whether a court would back it, but in whether the person signing believes a court would back it. On the day I signed, I didn’t know Article 25 existed. All I knew was the number three hundred thousand. That gap in information is where the whole profit sits.
This is also why they dare to set it so absurdly high. A reasonable penalty exists to cover losses; an absurd penalty exists so that you don’t dare do the math. If you did, you’d see it can’t stand—so it can’t let you get the chance.
Later it struck me that this is the same logic as a whole family of other things: non-competes handed to people who shouldn’t be restricted, confidentiality agreements handed to people who never touch any secrets, training service periods handed to people who were never trained. The function of these clauses isn’t to protect rights; it’s to preempt anyone claiming them. The cost is printing one sheet of paper. The return is several hundred people who, for years, don’t dare change jobs, don’t dare file a complaint, don’t dare refuse overtime.
And I’ll say something unpleasant: this is no different from Zhou Papi, the old landlord in the classic story who crawled out at midnight to imitate a rooster’s crow and stretch the working day earlier. Today’s version is even less work—no rooster impression needed. Just write one extra line into the contract, and people hand over their own time.
The Law Actually Built Three Cages for Dispatch
Zoom out to the institutional level, and you’ll see the law didn’t ignore this. It built three cages.
Cage one: which positions. Article 66 of the Labor Contract Law says labor dispatch may only be used for temporary, auxiliary, and substitutive positions. “Temporary” means the position lasts no more than six months; “auxiliary” means non-core business positions, and those must be settled through discussion by the workers’ congress or all employees and consultation with the union or worker representatives.
Cage two: the ratio. Article 4 of the Interim Provisions on Labor Dispatch: the number of dispatched workers used by a receiving company may not exceed ten percent of its total workforce.
Cage three: pay and liability. Article 63 requires equal pay for equal work—dispatched workers and the company’s own employees in comparable positions must be covered by the same pay-distribution method. Article 92 matters even more: where dispatched workers suffer harm, the dispatching firm and the receiving company bear joint and several liability.
Three cages, governing respectively “may you use it at all,” “how much of it may you use,” and “what happens once you have.”
In theory, if a state-owned enterprise or a government department handed its core business to a standing army of dispatched workers, at a ratio over ten percent, it would be breaking all three rules at once.
In reality, the three cages have basically done nothing.
The Cages Failed Because Everyone Changed the Name
The timeline is clear.
In 2008 the Labor Contract Law took effect. Open-ended contracts, severance, damages for unlawful termination—the cost of hiring people properly went up. Dispatch became the loophole, and within a few years its scale exploded.
December 2012, the law was amended; July 1, 2013, the amendment took effect: a dispatch firm needs at least two million yuan in registered capital plus an administrative license; the three-position rule and equal pay were emphasized again.
March 1, 2014, the Interim Provisions on Labor Dispatch took effect, with a two-year transition period requiring dispatch ratios to be pushed below ten percent by the end of February 2016.
And then? Then a great many companies stopped saying “labor dispatch” and started saying “outsourcing.”
Rename it, and the ratio red line no longer applies, equal pay no longer applies, and the word “dispatch” doesn’t even show up anymore. But the people are the same people, the desks are the same desks, the supervisor is the same supervisor.
The law actually saw this move coming. Article 27 of the Interim Provisions on Labor Dispatch is blunt: where an employer uses workers in the form of labor dispatch under the name of contracting, outsourcing, or the like, these Provisions shall apply.
The trouble is, what counts as “in the form of labor dispatch”? You have to look at substance:
- Who sets the shifts, who tracks attendance, who approves leave
- Who gives the orders, who runs the performance reviews
- Who issues the badge, the email account, the OA login, the door-access card
- Whether settlement is per head per month, or per deliverable
- Whether the work is the client’s core business, and how long it’s been going on
If all of these point to the client company, then it’s fake outsourcing and real dispatch, and Article 27 applies directly.
But making that finding takes evidence, evidence takes arbitration, arbitration takes time, and time is everything. Someone fighting a case while still working the job—even if they win, they may be long gone from that workplace; if they lose, word travels around the industry and the next job gets harder to find.
So Article 27 isn’t useless. It’s that the cost of activating it lands exactly where one individual can’t carry it.
The Motive for the Rename Lives in the Client’s Ledger
One more question down: why do it this way at all, knowing it’s fake outsourcing?
Because on the books, the difference is real.
A regular employee is a long-term liability for the client company: social insurance paid on the real wage, housing fund contributions at the mandated ratio, annual leave, sick leave, work-injury coverage, severance—and after ten years, an open-ended contract with no expiration date. Every one of these is a continuing obligation.
Outsource it, and all those obligations collapse into a monthly invoice for services. Same headcount, same work, barely less money spent—but the ledger line moved from “employee compensation” to “outsourced service fees.”
The difference between those two lines is brutally practical: employee compensation is money you owe people; service procurement is a line item you can cut. The first requires negotiation; the second only requires not renewing.
For SOEs and public institutions there’s an even harder layer: authorized headcount and the total wage bill.
Headcount is fiscal discipline; the wage bill is budget discipline. Those two lines fix “how many people I’m allowed to carry.” But the work still has to be done, so outsourcing becomes the only opening for adding people outside both lines. It isn’t even about “wanting to save money”—it’s about “wanting to sidestep approval.”
So this system can’t simply be filed under “greedy capitalists.” It’s simultaneously the cost logic of capital and the budget logic of the administrative apparatus, squeezing from both sides—and what gets squeezed out is outsourcing.
It Doesn’t Only Press Down on Me
There’s something a lot of people haven’t registered: dispatch and outsourcing don’t just press down on dispatched and outsourced workers. They press down on everyone who works for a living.
Because the whole scheme installs a cheaper substitute into the labor market. For any given role, the client can say at any time, “outsourcing this is better value.” The bargaining power of regular employees drifts down along with that floor.
So the thought “I’m a regular employee, this doesn’t concern me” is wrong. Today it’s the outsourced worker at the next desk; tomorrow it’s the whole business line outsourced; the day after, it’s “this department gets no regular headcount.”
And that’s precisely the effect it wants most: to break “we” down into a pile of separate “I”s.
In one department you can have regular employees, dispatched workers, outsourced workers, and interns—four kinds of contracts, four benefit schemes, four payroll entities. They all do the same work, yet they never add up to a body that can negotiate. No collective, no bargaining; no bargaining, and all that’s left is one individual squaring off against a contract that was already written before they arrived.
And an individual against a contract always loses. Not on the merits—on position.
On “Standing Up”
The way I originally put it was this: I don’t know whether the Chinese people have stood up; what I know is that I haven’t—I’m still being pressed down and exploited.
I still think that, but I want to say it more precisely.
That “standing up” sentence is about national sovereignty—about a people no longer subject to outside domination. My “standing up” is about bargaining power in an employment relationship—about whether one person can look at an unequal contract and say, “this clause I won’t sign.”
Those are two different things, on two different planes. Using the first as proof of the second—that’s the rhetoric.
A country’s industrial upgrading, its GDP, its high-speed rail, its space station—all real. One person earning ten thousand a month, carrying a three-hundred-thousand penalty, getting half a regular employee’s benefits—also real. Both can be true at the same time, and when they are, the second doesn’t hurt any less because of the first.
What I Can Do, and What I Can’t
What an individual can actually do is concrete, and also very limited.
Keep evidence: the contract, pay statements, attendance records, the chats and emails where the client directly orders you around, screenshots of your badge and system accounts. If it ever comes down to proving “fake outsourcing, real dispatch,” this is everything.
Assert rights: labor arbitration is free, with a one-year limitation period; claims for unpaid wages aren’t subject to that one year while the employment relationship subsists, and must be filed within one year of its termination. On the burden of proof, where evidence relating to the dispute is in the employer’s possession and control, the employer must produce it—failure to produce means it bears the adverse consequences.
Social insurance can go through the audit channel: contributions not paid on your real wage, or not paid at all, can both be demanded retroactively. This route is less constrained than arbitration by the question of “do I still want this job,” because it runs through administrative procedure.
But I have to be honest: none of these change the structure. They can only make one person lose a little less; they can’t stop it from happening again.
What has ever actually changed this is never one person going to arbitration. It’s the collective—a union that can genuinely negotiate, workers in an industry banding together, and policy willing to push the cost of enforcement above the payoff of breaking the law. This is also why the system insists on splitting people apart: it has never feared one person’s anger. It fears a crowd doing arithmetic.
That school in the news called it a “teaching talent reserve.”
I don’t know what became of those shadow teachers. I only know that a society which spends years using words like “reserve,” “training,” and “outsourcing” to say “not employing a person” while employing them will sooner or later have to answer one question:
Liability can be shifted, but people don’t just vanish into thin air.
So don’t ask me whether I’ve stood up. First give me back the paper I signed, and I’ll stand up myself.
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