Nutshell
Mr Kong began to working in a technology service company from 2005 as customer service and later administration, and signed an open contract on July 1st, 2013 as the director of administration with a monthly payment of 8000 yuan. In the mean time, it is prescribed that the base of sick leave payment is 70% of the monthly pay in the labor contract. From 2013, Mr Kong applied sick leave constantly for myocarditis and other related sickness, and till 10th February, 2017, he has already been given the 13 months medical treatment period. The company sent notice to require Mr Kong to back on position before 15th, February, 2017 due to the expiration of medical treatment period. Mr Kong replied that he cannot resume the position for the bad health situation. Then the company sent written notice to change Mr Kong to assistant and require to work before 23rd February, 2017. Then the company sent the termination notice for the reason that after the set period of medical care for an illness, the employee can engage neither in his original work nor in other work arranged for him by the employer and pay the severance and medical subvention.
Mr Kong has no objection on termination, but he thinks the sick leave payment shall be 100% of his salary as his work years is over 8 years. As the result from negotiation, he bring arbitration to Labor Dispute Arbitration Committee asking for the balance of sick leave payment from 2013 to February, 2017.
Issue
The issue in this case lies in whether the employer can negotiated sick leave payment base with the employee?
Mr Kong thinks the sick leave payment shall be 100% of his salary as his work years is over 8 years, but the company only paid 70%, therefore the balance shall be compensated.
The company defends that since there is agreement with Mr Kong which he never raise any objection, the clause shall apply.
Judgment
The tribunal supported part of Mr Kong’s requirement on the base of the principle to calculate sick leave payment base prescribed in Art 9 of Previsions on Enterprise Wage Payment in Shanghai published in August 1st, 2016 that for salary be explicitly agreed in the labor contract for the position, the agreed salary shall be applied. For the actual salary is different from the agreed, the actual payment for the position shall be applied. As Mr Kong’s salary is 8000 yuan, the company shall pay the sick leave payment of 8000 yuan as base from August, 2016. For previously, the clause can be applied.
Comment by Lawyer Tang
This is a dispute on sick leave payment.
It is quite common in practice that the employer negotiate the base for sick leave and over time payment with the employee, 70% is a common number for which there is a legal base. As provided in Notice on Strengthen the Management on Employer Sick Leave and Life issued by Shanghai Labor Bureau that for sickness or non-work-related injure leave within 6 months, the company pay the sick leave salary according to the following standard: work years below 2 years, pay 60% of the salary; work years from 2 to 4 years, pay 70% of the salary; work years 4 to 6 years, pay 80%; work years from 6 to 8 years, pay 90 %; and work years over 8 years and above, pay 100% of the salary. For sick leave over 6 months, the company pays sickness relief fee which is for work year below 1 year, pay 40% of the salary; for work years 1 to 3 years, pay 50% of the salary; work years above 3 years, pay 60% of the salary. The salary is 70% of the actual salary if work normally. Therefore the agreement can apply before August 2016.
From August 1st, 2016, the Previsions on Enterprise Wage Payment in Shanghai published, Art 9 prescribed that for salary be explicitly agreed in the labor contract for the position, the agreed salary shall be applied. For the actual salary is different from the agreed, the actual payment for the position shall be applied. As Mr Kong’s salary is 8000 yuan, agreed in the contract and same with the actual income, the company shall pay the sick leave payment of 8000 yuan as base from August, 2016.
We shall notice that the Art 9 also provides that base of overtime and sick leave is the income of normal presence excluding of annual bonus, traffic allowance, meal allowance, housing subsidy, overnight allowance, high temperature fee, or special income such as overtime work fee. Therefore the bonus and allowance shall be deducted when calculate the base.
It is common that a company provide a basic salary of 2420 yuan, and position income of 2000 yuan together, but only basic salary as the base for sick leave and over time. This kind of agreement is obviously against the Art 9 of Provisions on Enterprise Wage Payment in Shanghai. And we suggest the company to adjust.
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