Personal insolvency verses matrimonial law

By Ian Defty, partner at Begbies Traynor and insolvency advisor at Legal Futures Associate  Integrated Dispute Resolution.

It is fair to say that there has, for many years, been a “difference of opinion” between the law governing personal insolvency and matrimonial law with each “side” believing that they are right and should take precedence.

The principal, sometimes conflicting, legislation is covered in the Insolvency Act 1986 and the Matrimonial Causes Act 1973. However, the differing courts can and will give wide discretion when determining whether and how a married couple’s assets are to be divided.

In accordance with the Matrimonial Causes Act 1973 there is an expectation that assets accrued during the marriage should be regarded as jointly owned between the spouses and normally be divided equally between the parties, whereas assets held by one spouse or the other before the marriage should be left to that party unless there is good reason to divide them. The matrimonial home is usually always considered as a matrimonial asset to which the sharing principle applies.

But, relationship breakdown has grave financial and legal consequences. Some people may find themselves in a position where they inherit debts from their partners or can’t pay off their debts because of poverty. Therefore, personal insolvency can be a result of separation or divorce.

Personal insolvency is a resolution strategy for people who can’t afford to pay their debts. Debt solutions are available for insolvent people and are legally binding. These give insolvents protection from their creditors and can help eliminate some or all of their debts.

In personal insolvency the overriding principle is to see that the creditors as a whole get dealt with fairly and in accordance with insolvency law which may often seem to go against matrimonial law which seeks to ensure that a spouse and maybe children are dealt with first and foremost.

In general terms, all property belonging to or vested in the bankrupt at the commencement of the bankruptcy forms part of the bankruptcy estate and will vest automatically in the trustee in bankruptcy immediately upon their appointment. On the face of it, this may appear unhelpful to the bankrupt’s spouse, especially if they are divorcing.

Divorce and bankruptcy are critical legal cases. When dealt with simultaneously, they can be complicated. Hence, seeking professional legal help is a must. Anyone planning to file a bankruptcy can get help from a bankruptcy lawyer. They can help spouses facing mortgage foreclosure, wage garnishment, and other bankruptcy-related problems navigate chapters 7 and 13 for children’s welfare.

Section 306 of the Insolvency Act 1986 sets out that the bankrupt’s estate shall vest in the trustee immediately on their appointment taking effect or, in the case of the official receiver, on his becoming trustee.

The Insolvency Act 1986 goes on to set out the relevant insolvency legislation regarding what defines a bankrupt’s affairs (S.283) and the restrictions on dispositions of property (S.284).

Section 283 defines a bankrupt’s estate as;-

  • all property belonging to or vested in the bankrupt at the commencement of the bankruptcy, and
  • any property which by virtue of any of the following provisions of this Part is comprised in that estate or is treated as falling with the preceding paragraph.

Section 284 sets out the restrictions on dispositions of property as follows; –

  • Where a person is made bankrupt, any disposition of property made by that person in the period to which this section applies is void except to the extent that it is or was made with the consent of the court or is or was subsequently ratified by the court.
  • Subsection (1) applies to a payment (whether in cash or otherwise) as it applies to a disposition of property and, accordingly, where any payment is void by virtue of that subsection, the person paid shall hold the sum paid for the bankrupt as part of his estate.
  • This section applies to the period beginning with the day of the making of the bankruptcy application or (as the case may be) the presentation of the bankruptcy petition] and ending with the vesting, under Chapter IV of this Part, of the bankrupt’s estate in a trustee.
  • The preceding provisions of this section do not give a remedy against any person –
  1. in respect of any property or payment which he received before the commencement of the bankruptcy in good faith, for value and without notice that the bankruptcy application had been made or (as the case may be) that the bankruptcy] petition had been presented, or
  2. in respect of any interest in property which derives from an interest in respect of which there is, by virtue of this subsection, no remedy.
  • Where after the commencement of his bankruptcy the bankrupt has incurred a debt to a banker or other person by reason of the making of a payment which is void under this section, that debt is deemed for the purposes of any of this Group of Parts to have been incurred before the commencement of the bankruptcy unless —
  1. that banker or person had notice of the bankruptcy before the debt was incurred, or
  2. it is not reasonably practicable for the amount of the payment to be recovered from the person to whom it was made.
  • A disposition of property is void under this section notwithstanding that the property is not or, as the case may be, would not be comprised in the bankrupt’s estate; but nothing in this section affects any disposition made by a person of property held by him on trust for any other person.

If bankruptcy precedes an order made under the Matrimonial Causes Act the legal and practical outcome is straightforward and the assets vest in the trustee. Difficulties arise when the order under the Matrimonial Causes Act 1973 precedes the bankruptcy. The impact of the making of a bankruptcy order on matrimonial proceedings will therefore depend on the point that the matrimonial proceedings have reached.

Where a person has been declared bankrupt (or a bankruptcy petition has been presented against the debtor) prior to the making of a financial remedy order under matrimonial law, the matrimonial court is restricted in the financial remedy order it can make. Generally speaking, the matrimonial court cannot make a property adjustment order as the bankrupt’s estate will have vested in the trustee under the Insolvency Act 1986.

In accordance with S.336 of the Insolvency Act 1986, where an application is made by the trustee to realise the matrimonial home after a year since the vesting of the bankrupt’s estate in the trustee, there is a presumption that the interests of creditors outweigh all other considerations that will include that of the spouse (and other family members such as children).

The transfer of an interest in the matrimonial home pursuant to a consent order made under s.24 of the Matrimonial Causes Act 1973 constitutes a “disposition” for these purposes and is therefore void (Re Flint [1993]). This was reinforced in 1994 with Woodley v Woodley (No. 2) [1993] 2 FLR 477 by where the Court of Appeal held that the presentation of a bankruptcy petition is not a disposition for the purposes of s.37 of the Matrimonial Causes Act 1973 and cannot be challenged as an attempt to avoid an order for matrimonial relief. Therefore, the correct way to attempt to challenge an allegation of a spouse using bankruptcy as a fraudulent device to defeat his/her divorcing spouse’s matrimonial claim ‘s claim is to seek for the bankruptcy order to be annulled under s 282(1)(a) by the court exercising insolvency jurisdiction. It is not open to a judge of the Family Court to use the Civil Procedure Rules to transfer insolvency proceedings to the Family Court be dealt with as part of the financial remedy proceedings, per Arif v Zar [2012] EWCA Civ 986.

A matrimonial property transfer order made after the presentation of the bankruptcy petition is a void disposition by the debtor for the purposes of s.284 of the Insolvency Act. In 2010 a matrimonial settlement by ex-spouses which had not been finalised by the time a creditor issued a bankruptcy petition against the husband was struck out by the court as it constituted a disposition of the spouse’s property, per Warwick v Yarwood [2010] EWHC 2272.

Greg Williams, a barrister at Coram Chambers, London, who specialises in matrimonial finance cases, said: “During the last decade, ultralow interest rates combined with a generally high rate of employment has meant that our day-to-day divorce cases rarely feature bankruptcy issues. That may be about to change: the impact of Covid 19 and Brexit is likely to be felt this year. If personal or household debts becomes unsustainable, practitioners and their clients need to be alert to potential insolvency issues. Assets which would otherwise form part of the matrimonial pot can be lost entirely to a successful bankruptcy petition. Or we may see an increase in applications from trustees in bankruptcy to sell family homes to the chagrin of the remaining spouse and children.”

Indeed, bankruptcy law and family law are directly related to each other, with several changes in the past few years. In addition, the courts are getting more stringent in scrutinizing bankruptcy cases raised by parties to determine if they’re taking advantage of family proceedings, like a plotted divorce, in an attempt to write off their debts.

For more information or to discuss an insolvency matter within matrimonial law please contact IDR on or 0207 8465 600.

7 Self-Care Practices to Relieve Divorce Stress

In some cases, divorce is inevitable. However, that doesn’t make it any easier and is bound to take a toll on you emotionally and, in some cases, financially. While some factors are out of your control, such as how long it takes to finalize the whole process, self-care isn’t. It’s crucial to take care of yourself emotionally and physically if you want to come out of the other side of the divorce process a better person.

Here are a few tips to help you take care of yourself to see you through the separation and divorce process:

Take Care of Yourself Physically

It sounds cliché but taking care of yourself is one of the best ways to move on from a divorce. It’s crucial to ensure you get adequate sleep to re-energize your mind and relax your body. It can also help you kick start your day with light exercises for about 20-30 minutes, after which you should take a shower.

Exercising promotes the release of endorphins, also known as the feel-good hormone, which helps boost your mood. Consider exercising at least three times per week to boost your self-esteem, which can help improve your body image.

Moreover, diet is as important for your physical and emotional well-being. It’s common for most people to turn to junk food as a pick-me-up when going through a nasty divorce. Junk food and consuming too many carbohydrates have been linked to instances of depression. Instead, consider consuming foods rich in natural fats, lots of vegetables and fruit, and drinking plenty of water.

Last but not least, invest in looking your best outwardly. It may not seem like much, but wearing new clothes has been shown to boost self-esteem and mood. Consider grooming yourself by trimming your hair and nails, and reward your accomplishments with a massage every once in a while.

Invest in Your Mental Health

Taking care of your mental health is as equally if not more important than looking good on the outside. It’s easy to lose yourself in your work and forget to take some time out for yourself. Finding a new hobby or rekindling your passion for something that brought you joy is one of the most effective ways of dealing with negative emotions.

Avoid spending a lot of time alone but instead, get out more. However, it would be best to avoid getting into a new relationship before you completely heal from your present hurt. Avoid blaming yourself for things that don’t work out. Acknowledge the part you played, learn from it, and cut yourself some slack.

It may also help to speak with a professional counselor to help you through your grieving process. Most people are adamant about not seeking help, but it’s often said that a problem shared is a problem half solved.

Don’t Isolate Yourself

Isolation is part of the grieving and moving-on process. However, you shouldn’t isolate yourself for too long lest you get used to spending time alone. Consider spending quality time with your friends and family and open up whenever you’re ready. Socializing can help boost your mood.

Take Some Time off

We’ve talked about not isolating yourself, but it sometimes helps to take a break from your daily routine and go for that vacation you’ve always wanted. It can be something as simple as soaking in the bathtub for an hour or two or going to the spa. Taking a road trip can also give you some clarity.

Change Your Environment if Possible

Being in an environment that constantly reminds you of your situation can impede healing. It can be as simple as moving houses or getting rid of their picture and clothes. Some instances may require you to make drastic changes, such as cutting off mutual friends.

Revitalize Your Spirit and Soul

Avoiding negative emotions may be difficult, but you can keep them at bay by nourishing your spirit and soul. Some things that work wonders in this regard are yoga and meditation. Meditating and yoga help you focus on being in the present and helps you have a positive outlook on life.

Other activities that can help include reading a book, listening to music, and investing in your spiritual growth regardless of the religion you practice.

Nature Works Wonders

Your divorce may end up teaching you how strong you are, but before then, you need to avoid dwelling on the past. Getting out more and being lost in nature is one of the most effective ways to change your general outlook on life. Set aside some time to hike, travel and discover new places. Try out new cuisines and socialize in the process.

Listen to some music and dance your sorrow and worries away; the good thing is you can do it alone and still enjoy it.

Moving on from a divorce isn’t an easy feat. However, you can take small strides in the right direction by having a positive outlook on life instead of asking yourself what could have been. Begin by investing in yourself in all aspects; emotionally, physically, and spiritually. Then, work on improving yourself and do the things that make you happy. Lastly, be open to making new connections, and while it might not look like it now, time heals everything.

Establishing a charity in Hong Kong (Part III)

In the first two chapters of this series, the author covered the basic requirements for establishing a charity in Hong Kong, as well as the obligations in corporate governance. This final chapter explores tax exemptions and other practical perspectives in the hope of providing some food for thought to prospective philanthropists with an intention to run a charity.


Under the laws of Hong Kong, charities are entitled to receive tax benefits after satisfying certain conditions, the most important of which undoubtedly is the exemption of profits tax under section 88 of the Inland Revenue Ordinance (IRO).

According to section 88, if:

  1. profits are applied solely for charity purposes;
  2. such profits are not expended substantially outside of Hong Kong; and
  3. the trade or business is exercised to carry out the expressed objects of the charity, or that it is mainly carried on by persons for whose benefit such charity is established, the charity may be exempted from paying profits tax. However, investee trading companies are not entitled to such an exemption.

In addition, tax exemption is available only for charities subject to the jurisdiction of the courts in Hong Kong, in other words, charities established in Hong Kong or Hong Kong establishments of overseas charities. If donations of such charities are used outside of Hong Kong, such as for alleviating poverty in mainland China or overseas, a section 88 exemption cannot apply.

Charities wishing to qualify for exemption need to submit an application to the Inland Revenue Department (IRD). It should be noted that a tax exemption under section 88 denotes an entitlement of tax benefits under Hong Kong law, but is not a licence or permit issued to the charity. The IRD may review and confirm the charity’s status based on its changes and annual tax declarations, and the tax exemption may also be varied.


Once recognised as a tax-exempted charity, it becomes a priority to address the IRD’s enquiries or review questionnaires in a timely manner. As mentioned above, the IRD has the right to cease recognising a charity as tax-exempt. IRD statistics show that, for the six months ending 30 June 2021, 1,700 tax-exempt charities under section 88 were reviewed, 55 of which were disqualified from tax exemption due to a lack of response or loss of contact.

Therefore, charities wishing to maintain their tax-exempt status should review their operations and charitable activities to ensure they are in line with the charitable objects under their governing instruments, and complete IRD questionnaires on time.

In addition, while the IRD does not keep statistics on the nature of complaints, it generally carries out follow-up actions to several cases every year. In fact, charities can easily fall victim to poor management. For example, according to the annual report of Hong Kong’s Audit Commission in 2017, at least six charities were found to have misused funds, one of which paid as much as HKD13 million (USD1.7 million) in compensation to its directors for three years, and at least 11 parcels of land approved for setting up charities were actually used for running hotels for profit.

There were even reports in 2021 about charities hiring intermediaries to collect donations. Such misconduct and cases have tainted the public perception of charities and the overall reputation of philanthropy, which makes sound governance especially important for running charities.

Although Hong Kong currently does not have any specific law governing charities, government departments have continually explored reform measures. As fundraising and collecting donations are bread and butter for a charity, charities must be aware of managing their donations or funds, as well as the risks of such funds being used for money laundering or other criminal activities.

Although the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (cap. 615) only regulates specified financial institutions and non-financial businesses, such as trusts or company services providers, charities should nevertheless make reference to the corresponding government-issued guidelines.

For example, the Narcotics Division of the Hong Kong Securities Bureau issued An Advisory Guideline on Preventing the Misuse of Charities for Terrorist Financing, which legally requires that known or suspected terrorist property must be immediately reported to the Joint Financial Intelligence Unit.

In addition, the Best Practice Checklist – Management of Charities and Fund-raising Activities, issued by the Independent Commission Against Corruption, provides guidelines on handling donations after collection.


Running a charity takes not only good intent, but also meticulous planning and long-term commitment. Prior to setting up a charity, the purpose of the charity, anticipated events, and the wide range of governing issues that may be encountered should be considered comprehensively. More importantly, prospective philanthropists should be aware that the expansion of philanthropy in Hong Kong will inevitably attract stricter regulation, subjecting them to continuing obligations that may be amended over time, and requiring them to always keep their eyes open for potential risks.

First published in September issue 2022 of China Business Law Journal.

Anti-money Laundering in China: Moving to a Risk-Based Approach

On March 1, 2022, the Measures for Financial Institutions on Customer Due Diligence and Client ID Information, and Transaction Records Management (‘Measures’) came effective. The Measures issued by the People’s Bank of China, the Bank of China insurance regulatory commission, and the China Securities Regulatory Commission align with the current financial landscape, and international anti-money laundering standards by establishing a risk-based framework for financial institutions.

Risk-based approach 

With the development of financial products, financial institutions (‘FI’) need to respond more intuitively to money-laundering threats. A risk-based approach enables FI to implement ongoing proactive judgement, identify risks and deploy countermeasures. In practice, financial institutions are required to assess both new and existing customers and apply enhanced due diligence procedures to customers with higher risks. Equally, varying levels of due diligence will be utilised depending on the nature of the risk profile and transaction.

The Measures stipulate the following directives for financial institutions:

  • Identify and verify the identity of customers through reliable and independent certification materials, data or information;
  • Understand the purpose and nature of the client’s business relationship and transaction, and obtain relevant information according to the risk situation;
  • In cases where there is a high risk of money laundering or terrorist financing, understand the source and use of clients’ funds, and take enhanced due diligence measures according to the risk situation;
  • During the business relationship, take continuous due diligence measures on the customers, review the status of the customers and their transactions, and confirm that the various services and transactions provided to the customers are consistent with the financial institutions’ understanding of the customers’ identity background, business needs, risk status and the source and use of their funds;
  • Identify and take reasonable measures to verify the beneficial owner of the customer if the customer is a legal person or an organization without legal personality.
What does it mean for companies in China?

With enhanced customer due diligence, companies should update anti-money laundering (‘AML’) policies and improve discipline, control, and responsibility across the workforce to decrease risks. Specifically, we recommend evaluating current AML practices, training staff, and updating company procedures. Failure to update current practices or establish a concrete framework for international companies could lead to white-collar investigations and reputation damages.

If you have questions or concerns related to AML or other related matters, please contact Horizons at +86 21 5356 3400 or

Hair Straighteners And Uterine Cancer: Examining The Legal Connection

A rise in uterine cancer diagnoses has been observed during the past two decades. More than 60,000 new cases of uterine cancer will be found by 2022. This type of cancer has heightened concern for women’s health, which accounts for little more than 3% of all new cancer cases. Women may have more cases of uterine cancer because they use chemical hair straighteners more often

Even though this has long been known, new research highlights just how harmful Eurocentric aesthetic standards can be. For decades, girls and women have been impacted by the expectation that they must meet a standard that’s impossible to reach. Women need to value their appearance, but that shouldn’t come at the expense of their mental or physical well-being. This article will tackle the different angles of a hair straightener uterine cancer lawsuit.

Use Of Hair Straighteners And Hair Relaxers Linked To Uterine Cancer

Matters concerning the safety of the chemicals used in popular hair care products like hair straighteners and hair relaxers have been brought to light by a new study published in the Journal of the National Cancer Institute.

To keep these things from happening, hair products must follow the same strict safety rules as cosmetics. Consumers have a right to hair products free of cancer-causing ingredients, and a flaw of this nature could provide a legal basis for a lawsuit.

This study is similar to ones that have been published in the International Journal of Cancer and found possible links between using hair straighteners and hair dyes and getting breast and ovarian cancer.

There were 33,497 American women aged 35 to 74 who had never been diagnosed with breast cancer and who participated in the Sister Study conducted by the National Institute of Environmental Health Sciences (NIEHS). More than 378 incidences of uterine cancer were identified over the course of the study’s nearly 11-year follow-up of the women.

Why Are Hair Straighteners Linked To A Higher Probability Of Developing Uterine Cancer?

Although NIH researchers didn’t collect brand-specific data, they did find evidence of many compounds known to be present in hair straighteners sold in stores. Parabens, bisphenol A, metals, and formaldehyde are all examples of such substances.

Because of the greater absorption through the scalp, chemical exposure from hair product use might be incredibly worrying. The dangers can skyrocket when combined with corrosive and cancer-causing chemicals.

Signs And Symptoms Of Uterine Cancer

For those who have experienced any of the following signs and symptoms, you must see your doctor immediately for evaluation:

  • Pain or cramping in the hips, pelvis, or lower abdomen
  • Spotty or heavy bleeding in the genital area prior to menopause
  • Normal or abnormal postmenopausal vaginal bleeding or spotting
  • If you’re over 40 and you experience very regular, heavy, or protracted vaginal bleeding
  • Discharge from the vaginal opening that’s white or clear in color after menopause

A chemical hair straightening lawsuit is something you could look into for compensation if you used hair relaxers and were later diagnosed with uterine cancer.

Hair-straightener Uterine Cancer Lawsuits: What Evidence Is Needed?

For a hair straightener company to be held responsible for a possible link between their product and uterine cancer, the plaintiff would have the burden of proof to establish that the defendant knew or should have known of the risk but did nothing to reduce it or warn consumers. Further investigation is needed where there’s evidence of at least four different uses. This is where the research skills of litigation lawyers come in.

Who Can File A Hair Straightening Cancer Lawsuit?

When assessing whether a woman’s usage of chemical hair relaxers caused her cancer, doctors look for a number of distinct indicators. Common causes of legal action are:

  • Usage of chemical hair straightening products
  • They first used chemical hair straightening products when they were teenagers, but they still use them now as adults.
  • Is a long-time user of chemical hair straightening products.
  • Professional or at-home use of chemical hair straightening products was common.
  • Scalp burns, but not enough to warrant legal action.
  • Was told they had cancer of the uterus or another organ
  • Doesn’t have a history of a uterine cancer or any other kind of cancer in their family

A woman doesn’t have to meet all of the above requirements to file a hair straightening lawsuit, but doing so would help her case. Suppose you or a loved one has developed cancer after having their hair chemically straightened. In that case, you may want to consult a product liability attorney to find out if you qualify for a hair straightening cancer compensation.

The Final Note

Despite its relative rarity, the most prevalent form of cancer in women is that which affects the uterus. While it may be treated if detected early enough, the mental, financial, and physical toll is enormous.

If you’re considering suing a company, you should first speak with an attorney. A skilled attorney will be able to evaluate the unique circumstances of your case and advise you on the best course of action, including where and against whom to file suit, whether or not you have the requisite amount of time to do so, and others.

A lawsuit can’t undo the harm done to you and your loved ones, but it can help you get the medical attention you need to start recovering. An attorney will fight hard to protect your rights because you deserve justice for the terrible things that happened to you.

Leading States with the Most Car Accidents in 2022

Almost 200,000 automobiles are involved in fatal accidents each year in California. Resources like the National Highway Traffic Safety Administration (NHTSA) predict these numbers will rise in the coming years.

Other States with Leading Car Accidents


Texas had 4489 deaths resulting from car crashes, an increase of 15.22% from 2020, at 3896. The rise is projected to continue in 2022.


Florida is also in the category of the leading states in car accidents. The number of people who died was 3484. This is from an increase of 15.6% in 2020 compared to 14:7% in 2019.

What to Do When You Are Involved in a Car Accident

Check for Injuries

First, stay calm and do not panic. If you are in an accident, check to see if you have any injuries. If you do, call emergency services and follow their instructions.    If someone else is involved in the accident, find out if they are okay or need medical attention.

Call 911 if needed. If involved in a collision with another vehicle, get your car registration information and contact information (name, phone number, and the insurance company), so you can give it to the other driver’s insurance company when they arrive on the scene.

If you don’t have your car registration with you, tell the officer as soon as possible. Collect your belongings and take photos of everything before anything gets moved or taken away. If another person is in the accident and unconscious or unable to communicate, ensure they don’t move until emergency personnel arrives.

Move to a Safe Location

Suppose you can move as far away from the collision as possible. You must stay where emergency responders will be able to find you. If you can’t get out of the vehicle, ask for help from first responders. Stay calm, but be alert and aware of what is happening around you.

Call 911 and tell them exactly where you are. Use landmarks to describe your location if you aren’t sure.

Call the Police

The most important thing you should do after getting into an accident is to call the police. The reason for calling the police is so that they can document the accident and take care of any paperwork that needs to filing.

The other driver may want to call their insurance company as well. If you are the one who called, get all the necessary information about your vehicle for when the police arrive. Make sure you have the following:

  • Registration information
  • License plate number, and
  • Vehicle identification number, please give.


Car accidents are unavoidable, but there are measures you can take to ensure your safety if you do get into one.

  1. Always check for injuries
  2. Get to a safe location, preferably away from the scene of the accident.
  3. Call for help by dialing the police on their official toll-free number. (If you are in the US, it’s 911).

To prepare for the possibility of a car accident, familiarize yourself with the 2022 Florida statutes in order to understand some of the laws.


C&M Opens Doors to its Fourth Office in Hyderabad

Chandhiok & Mahajan is pleased to announce the opening of its fourth office at Hyderabad. Located at Shangri-La Plaza in Banjara Hills, the office can accommodate up to 10 lawyers and staff.

Competition and disputes partner, Avinash Amarnath, has relocated from C&M’s Bengaluru office to take over as resident partner in Hyderabad.

Pooja Mahajan, C&M’s managing partner said:

We are delighted to be in Hyderabad. With Bengaluru and now Hyderabad, we are better placed to serve our clients in the wider Southern region.

Avinash is an exceptional colleague. We are grateful to him for taking up the responsibility of leading C&M in Hyderabad.

Commenting on the opening of the office, Sujoy Bhatia, partner and head of corporate commented:

C&M has been serving clients in Telangana and Andhra Pradesh remotely from Delhi and Bengaluru. The opening of the Hyderabad office is in response to our clients requesting us to be closer to them both on transactions and litigation.

How to Use Digital Invoices (Fapiao) in China

Hiring and Firing Temporary Employees in China

Hiring temporary employees can provide an affordable solution to manage workload fluctuations. Specifically, if there are unexpected employee absences or special projects which requires specialists onboard or extra employees to balance out the workload.

At Horizons, we encounter European companies with Chinese subsidiaries who hire part-time personnel or utilise third-party employment agencies, without establishing the correct management. Often, the European headquarter have not been informed that the subsidiary has employed temporary staff and onboarding training wasn’t conducted.
In such circumstances, the subsidiary can be exposed to risks and without robust corporate governance, the situation can quickly snowball out of control.

Below, we highlight the best practices for hiring temporary employees in China.

Ensure part-time employees do not exceed the statutory hours

Companies may hire part-time employees. In such cases, the labour relationship is concluded between the employee and the company. Although a written contract and a probation period is not required, the working hours shall not exceed four hours per day or an accumulated 24 hours per week.

Adopt labour dispatch under the statutory circumstances

Labour dispatch refers to personnel dispatched by employment agencies to receiving companies. Labour dispatch is a supplementary employment and shall only be adopted in the following circumstances:

  • Temporary work with a maximum term of 6 months;
  • Auxiliary position who supports a main employee position; and
  • Substitution of employee, who due to reasons cannot work within a period.

The dispatched worker is recognised under the Labour Contract Law as an employee of the employment agent. Therefore, a labour relationship is established between the employment agent and dispatched worker and a labour contract with same contractual terms of a normal labour contract shall be concluded. Although, the fixed term of employment shall be no less than two years.

Verify the employment agency

Employment agencies shall satisfy all the following conditions:

  • Registered capital of no less than 2 million RMB;
  • Proper business premises and facilities;
  • Established a work placement management system accordingly to laws and regulations;
  • Acquired business license with the labour administrative department, proceeded in the business registration formalities, obtained required licenses; and
  • Other requirements stipulated by the laws and regulations.

No employment agency shall operate without meeting the above conditions; therefore, companies should verify whether the employment agency can legally operate beforehand.

Include statutory items in the staffing agreement

The employment agency is required to enter into staffing agreements with receiving companies. The staffing agreement shall define the job positions, number of persons dispatched, the term of placement, amount and method of labour remuneration, social insurance premiums and the liability of breach of agreement.

Ensure obligations are executed  

Receiving companies are prohibited from transferring the dispatched worker to another employer and obliged to provide the following:

  • State labour standards and corresponding labour protection and working conditions;
  • Notify the dispatched employees of job requirements and salary;
  • Pay overtime wages and performance bonuses;
  • Provide welfare benefits appropriate for the position;
  • Provide the necessary training for the job position; and
  • Implement a normal wage adjustment mechanism for continuous labour dispatching.

Adopt the principle of equal pay for equal work

Companies shall pay dispatched personnel the same remuneration amount as employees in the same role or workload. And the remuneration system based on the principle of equal pay for equal work shall be extended to dispatched personnel. The employment agency cannot retain any part of the remuneration and wages are required to be paid monthly.

Ensure termination is conducted according to the Labour Contract Law of the People’s Republic of China

Companies may terminate the dispatched personnel according termination provisions of the Labour Contract Law (For more information on employee termination, please see our article China business: Labour 101). The employment agency then terminates the labour contract with such employee according to the relevant provisions.

If you would like more information about China labour law and HR best practices or other related corporate matters, send us an email at, and we’ll have a Horizons professional contact you.

Vivian Desmonts joins Leaders in Law as the M&A Law Expert in China

Leaders in Law the leading platform in its field, is delighted to welcome Vivian Desmonts as our exclusively recommended & endorsed M&A Law expert in China.

Vivian will focuses on building relationships with Chinese businesses entering or expanding in international markets, as well as international companies looking to do business in China. He is responsible for the day-to-day management of the Guangzhou office.

Vivian previously joined from DS Avocats after serving for a number of years as the firm’s Chief Representative in Guangzhou, having been instrumental in establishing the office there in 2007. He worked as an associate lawyer in the Paris office of DS Avocats and spent some time with the firm in Shanghai.

Licensed as a French attorney at law admitted to the Paris Bar, he is also a registered foreign lawyer with the Guangdong Provincial Bureau of Justice and arbitrator at the Shenzhen Court of International Arbitration.

Vivian broad expertise ranges from legal services and particular experience in advising clients on the establishment, acquisition, operations and restructuring of joint venture companies and wholly foreign owned enterprises in China. He has extensive knowledge of the Chinese market and wider region, and has worked with national and international clients from all sectors.

Practice Areas

Career / Qualifications

  • November 2019 – Gowling WLG (UK), Partner
  • 2012 – Member of the panel of arbitrators, Shenzhen Court of International Arbitration
  • 2007 – DS Avocats, Expatriate Partner, Chief Representative Guangzhou office
  • 2007 – Registered foreign lawyer, Guangdong Bureau of Justice
  • 2004 – Admitted to the Bar, Paris
  • 2004 – DS Avocats, Associate
  • 1999 – University of Paris II Assas, Master in Business and taxation law (Maitrise de droit des affaires et fiscalité)
  • 1998 – DS Avocats, Paralegal/Intern


  • 2000 – University of Paris II Assas, Postgraduate degree in Comparative law (DEA de droit comparé)
  • 1998 – University of Le Havre Normandy, Bachelor in private law


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