When Absenteeism Strikes: Managing Sickness Absence from Work
By Sun Jin(Marlow), Chinese attorney at Law, Xue Junge (Shirley), Zhejiang Xinmu Law Firm. This is an article wrote for Human Resources of Thomson Reuters (The Official Journal of the Hong Kong Institure of Human Resource Management), republishing this article please indicate author and source of this article. @ August 2, 2010
Medical period and sick leave
A medical period is different from a sick leave. It refers to the period of time during which an employee is allowed to stop working for receiving treatment to cure an illness or non-work related injuries. During this period, the employer cannot terminate the employment contract. It is a statutory period determined by the law of the People’s Republic of China (PRC) and an employee’s service period.
Sick leave is the actual period of time an employee is absent from work for medical treatment without losing his/her pay. It is determined by the company and stipulated in the employment contract. For instance, an employee who has worked for a company for one year can enjoy a four-month sick leave, although by law he/she is entitled to a three-month medical period.
Because of the complexities of managing sick employees, it is important for HR professionals to know how to calculate sick employees’ medical period, in accordance with Article 3 of the Regulations on Employees’ Medical Period issued by the PRC Ministry of Labour in 1994. Statutory details of medical period are summarised as follows:
A medical period should begin from the first day of sick leave and it should be accumulative. For example, if an employee, who is entitled to a three-month medical period, starts to take sick leave from 1 April 2013, the relevant medical period will fall between 1 April 2013 and 1 October 2013(the calculation cycle). If, during these six months, the employee takes a three-month sick leave, he/she will not enjoy any medical period after this six months. If he/she accumulates just a two-month sick leave until 1 October 2013, his/her medical period will be terminated after 1 October 2013. The employee will thus not enjoy the remaining one-month medical period.
Calculating salaries for sick leave
Article 59 of Opinions on Some Issues during the Implementation of the PRCLabour Law set out that an employer should pay a salary no less than 80% of the local minimum wage during the employee’s treatment for illness or non-work related injuries.
Additionally, Article 40 of the PRC Labour Contract Law stipulates that, when an employee falls ill or suffers from non-work injuries and is not able to resume his/her original position after the medical period expires, nor can he/she assume another position arranged by the company, the employer may terminate the employment contract.
In this case, the employer has to notify the employee in writing 30 days in advance, or pay him/her an extra month’s salary. In the event of non-termination, if the employee still needs to take sick leave after the medical period expires, this can be regarded as leave of absence for personal reasons. As such, the employer does not need to pay the employee wages during this period. Yet, the employer should provide social insurance to the employee.
Other issues to bear in mind
1. Termination during the medical period
It should be noted that an employment contract can be terminated during the medical period if the employee suggests or agrees with the company to terminate it. What matters is that the employer does not terminate the employment contract unilaterally, unless the employee meets the criteria listed in Article 39 of the Labour Contract Law (ie. failure to meet the recruitment conditions, violation of rules, damage to the employer, employment relationship with other employers, invalidation of the employment contract, and investigation for criminal liabilities).
2. Preventing false sick leave
It is advised that HR professionals clarify in employee handbooks and/or employment contracts that the employer only accepts medical certificates issued by hospitals designated by the company. The employer should not select hospitals that are far from the workplace.
Also, all staff should be informed that taking false sick leave is a serious violation of the company’s rules, and that the employer is entitled to terminate the employment contract under such circumstance.
3. Whether medical period covers employees on probation
The PRC Ministry of Labour stated that employees who are ill during the probation period can enjoy a three-month medical period and welfare benefits. In order to protect the employer’s interests, HR professionals could negotiate with the employee before signing the employment contract to suspend the probation period at the beginning of the medical period. The probation period would then resume after the medical period ends.
This would prevent the employee on probation from becoming regular staff without being properly evaluated. This would also reduce potential labour costs and risks for the employer without violating the PRC laws or the employee’s legitimate rights and interests.
Managing benefits for female employees
1. Determining employees’ holidays and salary standards
Female employees are protected by PRC law especially during pregnancy, childbirth and lactation periods.
Articles 6, 7 and 9 of the Special Rules on the Labour Protection of Female Employees summarise the holidays and benefits female employees can enjoy during these three periods as follows:
If an employer contributes to maternity insurance, pregnant employees will enjoy maternity allowance and medical expenses. The employer can apply to an insurance agency for maternity allowance and medical expenses within one month after the employee’s maternity leave expires. This allowance is based on the average monthly wage of the preceding year of all employees. In the event the maternity allowance is less than a female employee’s monthly salary, the employer should pay the difference. If the maternity allowance is more than the female employee’s monthly salary, the employer is not allowed to deduct the difference.
If an employer does not contribute to maternity insurance, he/she should pay not only the female employee salary during maternity leave, but also any expenses treatments that the female employee needs to receive during maternity leave.
The relevant PRC laws list the other holidays female employees are entitled to:
2. Violation of the family planning policy
Articles 39 and 46 of the PRC Labour Contract Law allow the employer to terminate an employment contract unilaterally and not compensate the pregnant employee, only if the violation of the family planning policy constituted a serious violation of the company’s rules. It is therefore important that HR professionals list and publicise behaviours that violate the family planning policy.
In addition, Article 42 of the PRC Population and Family Planning Law states that female government employees who violate the family planning policy will be subjected to administrative penalties and disciplinary sanctions.
Article 39 of the PRC Labour Law indicates that an employer cannot terminate the employment contract of a pregnant employee during the three periods, even if her employment contract expires. In this case, her employment contract should be extended until the end of the breastfeeding period. Should the employer allow the employment contract to expire without extending it, it would mean a violation of PRC laws. The pregnant employee could require the employer to compensate her by paying twice the standard compensation.