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Human Resources and Payroll in China 2016-2017 (5th Edition) -
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Employees may not take paid annual leave under the following circumstances:
• Where an employee is legally entitled to a summer and/or winter holiday that is longer than
their annual leave;
• Where an employee takes at least 20 days of personal affairs leave and the salary is not deducted
according to the regulations of the employer;
• Where an employee whose accumulated working time is more than one year, but less than ten
years, takes sick leave of at least two months;
• Where an employee whose accumulated working time is more than ten years, but less than 20
years, takes sick leave of at least three months;
• Where an employee whose accumulated working time is at least 20 years takes sick leave of at
least four months.
How to deal with employees’ untaken annual leave
In the case where an employee has not taken all of their paid annual leave in that year, and does
not agree to carry over the untaken leave to the next year, the employer must compensate this
employee with 200 percent of the employee’s average daily wage for each day of unused annual
leave, in addition to their regular daily wage. Many foreign companies in China provide additional
annual leave for their employees as a benefit. As this part of annual leave is not specified in Chinese
labor laws, employers have the right to make internal HR rules regarding compensation schemes.
Employee’s daily wage= Employee’s average monthly salary/21.75 days
Note that the average monthly salary doesn’t include overtime payments.
In practice, employees are generally required to use up their leftover annual leave from the previous
year before a specific deadline set by the company’s internal rules. Employers are advised to write
down these rules in the employment contract or the employee handbook to avoid any possible
future labor disputes. Additionally, the employer may calculate the annual leave for newly hired
employees as below:
Theamount of annual leave= (thenumber of dayshe/shewill beworking for the current employer
in that year ÷ 365) × his/her total annual leave in the same yea
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