How can we effectively manage sick leave policies in our expanding China operations?

Our company has opened several offices in China and we recognize the need to handle sick leave issues correctly. Can you provide an overview of how we should approach sick leave calculation strategies there?

Sick leave in China is one of the most complicated issues an employer must deal with.

First, you must calculate the duration of the leave – which can last up to two years! National Law provides a basic framework based on an employee’s length of service; however, each province and local government may set its own guidelines which vary greatly. Shanghai, for example, offers progressive sick leave starting with three months, and an employee gains an additional month for every complete year of service. Yet in practice, local courts often apply the formula differently.

For employees battling severe illnesses like cancer or mental health disorders, National Law provides that sick leave can be extended up to 24 months. Yet, applying this extension also varies by region. Courts in Shanghai grant 24 months regardless of employees’ actual conditions, while courts in Shenzhen, a city located in the Guangdong province, only approve an extension based on actual needs. Some districts in Beijing may mandate a capacity assessment to justify an extension. For long-term leaves, employers often strategically negotiate an early termination, but this involves paying more than the legally required severance to get their consent.

Calculating sick leave salaries also varies by region. In Shanghai, salaries during sick leave are based on years of service and the duration of the leave. As time off progresses, the salary may be reduced gradually from 100% down to 60%. Other regions give a flat 80% of the minimum salary.

Overshadowing all of this is National Law which strictly protects employees from getting fired while they are on sick leave for any reason, including performance, major changes in the company, and even layoffs. The only exception is gross misconduct. Thus, any mistakes in your calculations can result in a wrongful termination claim.

We are your local resource the next time you face a sick leave issue in China!