Due to Shanghai’s economic prowess and labor market, the city has a more developed labor regulation for extended sick leave.
In Shanghai, the Labor Capacity Appraisal Center, a governmental institution, certifies the viability of extending an employee’s sick-leave period. The Center evaluates if the employee has totally lost his/her labor capacity and if he/she qualifies or not for disability pension benefits.
In any case, an extended sick-leave period must be agreed upon by the employer and the employee and has certain minimum and maximum periods. The legality of the extension is contingent upon many factors, including the evaluation by the center and the employee’s submission to the treatments prescribed to cure/improve the diagnosis.
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Over the last 30 years, China’s labor law has been slowly evolving to adapt to its growing international aperture. As its population, demographic slope levels out along with its historically high economic growth, China’s traditional exceedingly deregulated labor market is changing.
China’s labor law, approved by the Standing Committee of the National People’s Congress, came into force in 1995 (a good 40 years after most countries’ labor law frameworks). Since then, workers’ benefits have been increasing steadily, including the recognized right for access to China sick leave.
In the midst of China’s road to privatization, the Government has delegated many of its responsibilities regarding employee sickness and healthcare operations to government funds and private insurance companies.
Companies are now legally in charge of covering health risks on the front end, often supported by insurance policies on the backend.
General Framework of China Sick Leave
Chinese labor law defines sick leave as a period of time off from work given to employees who suffer from an illness or a non-work-related injury.
After having been diagnosed and given the appropriate medical certificate, employees fall under the special jurisdiction of employment stability. Said jurisdiction protects them from termination during their treatment and orders that they are paid a reduced sick leave wage.
In China, employees are entitled to a period of medical treatment that can vary from 3 to 24 months on account of illness or non-work-related injuries. The period varies depending on cumulative working years since the employees started to work and the length of their service in their current company.
The distribution of China sick leave allotted is as follows:
Working Experience | Years with current employer | Allowed medical treatment |
|---|---|---|
< 10 years | < 5 years | 3 months |
< 10 years | ≥ 5 years | 6 months |
< 10 years | < 5 years | 6 months |
≥ 10 years | ≥ 5 years, < 10 years | 9 months |
≥ 10 years | ≥ 10 years, < 15 years | 12 months |
≥ 10 years | ≥ 15 years, < 20 years | 18 months |
≥ 10 years | ≥ 20 years | 24 months |
An employee is usually compensated at 60 to 100 percent of their normal wage during their sick leave period. The percentage of employees have a right to depends on their seniority.
Percentages and seniority criteria can vary slightly depending on the region. Different industrial cities and rural areas in China interpret the national regulations differently and calculate sick leave accordingly.
The following chart provides a summary of the China sick leave wages as a percentage of salary in the function of seniority in Shanghai.
Years of consecutive service at the company | Sick-leave wage as a percentage of an employee’s salary | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
During the first 6 months of an employee’s sick-leave period | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
< 2 years | 60% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2–4 years | 70% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
4–6 years | 80% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
6–8 years | 90% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
> 8 years | 100% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
When the employee consecutively takes leave of more than 6 months | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
< 1 year | 40% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
1–3 years | 50% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
> 3 years | 60% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Official Approval of China Sick Leave Certificate
In order for an employee in China to receive sick leave, he or she must first go to a hospital and receive an “official approval of sick leave certificate.” The physician thoroughly examines the patient. If he or she determines that the patient is ill or has suffered a non-work-related injury, the physician provides the certificate. The worker then submits this certificate to the employer and commences the sick leave period.
Difference Between Sick Leave and Work Injury Insurance in China
It’s very important to not confuse China sick leave caused by an illness or non-work related issue, with Work Injury Insurance in China.
With the promulgation of the new and revised regulations in 2011 concerning work-related injuries, the Social Security Administrative Department of the State Council expanded the application of the regulations to include incidents occurring outside of work premises.
These incidents include injury during commuting and traveling for work reasons under specific circumstances. In the same way, employees who acquire occupational illnesses, injure themselves while working, or die in situ while performing work-specific tasks, or within 48 hours after work hours, all come under a special jurisdiction as work-related injury insurance beneficiaries.
Employer’s Obligations During an Employee’s China Sick Leave Period
During an employee’s sick leave the employer acquires specific obligations imposed by the employment stability jurisdiction previously mentioned. In general terms, these obligations are to:
- Not terminate/fire an employee during his/her sick-leave period. There are certain exceptions to this rule, but termination during sick leave can be extremely risky for the employer because of the suspicion and burden of proof to rule out the reason being the diagnosis itself.
- Extend the term of the contract when the employee’s labor contract is due to expire during their China sick leave period. This extension must include the day the period ends and is also subject to any duly credited extensions.
- Pay the employee’s sick-leave wage according to their seniority for the entire duration of the treatment period duly certified by a physician.
*Remember that termination after the expiration of a sick-leave period is subject to certain procedures such as making sure the employee has not been extended among others. One example of this is that if the employee falls ill or is injured due to a non-work-related reason, and is not able to take up the original post after completing the medical treatment period, nor can he/she assume any other position as arranged by the employer. Another position must be offered in certain circumstances.
Some Recommendations for Employers
- He who sweats most in peace bleeds least in war: Remember to always conduct general check-ups once a year for your employees and be strict with medical entrance examinations. Prophylactic measures and early diagnosis are always cheaper than letting an employee’s health deteriorate until you have to pay an extended sick leave.
- Make sure you check regional and urban regulations to calculate all kinds of labor-related operations, including China’s sick leave. Some regions and industrial cities have more favorable percentages and benefits for employees than others.
Falsifying medical documents and official certificates is a common practice in China, this being said, remember that:
- He who sweats most in peace bleeds least in war: Remember to always conduct general check-ups once a year for your employees and be strict with medical entrance examinations. Prophylactic measures and early diagnosis are always cheaper than letting an employee’s health deteriorate until you have to pay an extended sick leave.
- Make sure you check regional and urban regulations to calculate all kinds of labor-related operations, including China’s sick leave. Some regions and industrial cities have more favorable percentages and benefits for employees than others.
Falsifying medical documents and official certificates is a common practice in China, this being said, remember that:
- The extension of a sick leave period in Shanghai is subject to the Labor Capacity Appraisal Center’s evaluation. Check the documents given to you by the employee or get your HR people to, and call the office for the reference code and the employee’s name to make sure it’s not a fake.
- As an employer, you have the right to verify the authenticity of a medical note, diagnosis, and China sick leave certificate. You can do this by calling the health care provider or office and referencing the code or employee’s name.
China in the ILO and What to Expect in the Upcoming Years
Although China has been a late bloomer in terms of labor-related legislation, the economic giant is adapting and regulations are becoming increasingly stricter.
The International Labour Organization has been reporting an upward trend in worker protection and good practices. China has currently ratified 26 out of 189 conventions, including the cornerstone C155-Occupational Safety and Health Convention of 1981, which has been in force in the country since 2007.
In addition to China’s growing commitment to international labor standards, political and legal unrest regarding working conditions are also on the rise.
According to Bloomberg sources, the Supreme People’s Court reported that new labor disputes accepted by the Chinese court system totaled 483,311 in 2015—a 25% increase compared to the year before.
This statistic kept rising in the first half of 2016 and continues to show growth. Claims referred to as labor-services disputes, which mainly take place when companies use third-party labor agencies to outsource workers, went up 38 percent in 2015 from 2014.
How Horizons Can Help with China Sick Leave Issues
When you hire employees in China, you must comply with the local labor laws, including China’s sick leave regulations. However, many new businesses are not familiar with these Chinese laws and may inadvertently disobey them, which can lead to major compliance issues.
Horizons can take on this burden for you by serving as China’s employer of record. In this role, we are the direct employer and take on all liability issues associated with hiring employees in China, so you don’t have to worry about these concerns while you get the benefit of having a local workforce at your command.
This article is a publication of Horizons. The purpose of this article is to inform our clients and readers of a changing legal landscape. It is not intended, nor should it be used, as a substitute for specific legal advice or professional legal counsel.
