How to Manage the Annual Leave in China


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The annual leave in China is a topic of great interest for both companies and employees, but it is worth noticing that not every employee can enjoy it.

For example, interns and the company are not in a labor relation, so the paid annual leave provisions do not apply.

Another example is for retired rehired employees. They do not enjoy statutory annual leave, but the company can give them certain paid holidays through internal rules and regulations to make up for the difference between them and ordinary employees.

In this article, we will show you the policies related to annual leave in China, and how to manage it effectively.

Policies annual leave

Starting from the rationality and the original intention of the annual leave legislation, the dispatched employees who meet the requirements of the annual leave regulations shall enjoy the annual leave. Within the terms of the labor contract:

  • if the number of days paid by the labor dispatch unit in accordance with the law is more than the number of days of annual leave it should enjoy during the period of no work, the annual leave of the current year shall not be enjoyed;
  • if the number of days of annual leave is less than the number of days of annual leave, the labor dispatching unit and the actual accepting unit shall negotiate with each other to make up the number of days of annual leave for the dispatched employees

The dispatching unit shall negotiate with the actual accepting unit for the annual leave of the dispatched worker during the normal working period, and the accepting unit shall be specifically responsible for the arrangement and implementation.

How to manage the statutory annual leave in China

Days of leave

First of all, you have to understand the policy for the annual leave of full-time employees.

Below you can see the statutory annual leave that the employee is entitled to have based on his/her cumulative working time:

  • Cumulative working time of less than one year – No leave days
  • Cumulative working time between 1 and 10 years – 5 days leave
  • Cumulative working time between 10 and 20 years – 10 days leave
  • Cumulative working time of over 20 years – 15 days leave

It’s important to note that:

  • National holidays and rest days are not included in the annual leave
  • The cumulative working time is not limited to the length of time an employee has worked for their current employer, but rather refers to their cumulative work experience with all previous and current employers

Cases when employees do not receive the annual leave

In some cases, employees don’t get their annual leave. These cases are:

  • employees enjoy winter and summer vacations according to the law, and the number of vacation days is more than the number of annual leave days;
  • if the employee asks for personal leave for more than 20 days and the company does not deduct the salary according to the regulations;
  • for employees who have taken sick leave for more than 2 months after working for more than 1 year but less than 10 years;
  • for employees who have taken sick leave for more than 3 months after working for more than 10 years but less than 20 years;
  • for employees who have accumulated sick leave for more than 4 months after working for more than 20 years.

The company shall obtain employee’s consent in the case it is unable to arrange annual leave due to work needs or for a whole year.

The annual leave complete settlement cycle is actually 2 years, so the annual leave of the current year is arranged in the second year at the latest.

If the arrangement cannot be completed by the end of the second year, it must be settled. Therefore, we often see a rule like “use it by March 31st of the next year, otherwise, it will be deemed invalid”.

How to deal with untaken annual leave

Employees fail to take the annual leave due to reasons other than their own

When the employee fails to take his/her annual leave due to reasons other than his/her own, the company shall pay the employee the corresponding salary according to the number of days of annual leave he/she should take.

The payment standard shall be 300% of the average daily salary of the employee for each day he/she should take off, but it is worth noting that this includes the salary of the employee during the normal working period.

For example, you still have 5 days of annual leave in 2019, and you are not planning to take it. The full attendance salary in December is 10,000 RMB, so the salary in December is:

  • Monthly normal wage income + salary income without annual leave compensation = 10,000 + (10,000/21.75) * 5 * 2 = 14,598 yuan

Your unpaid annual leave should be paid twice as much as your average daily salary, not three times as much because regular work hours are already included in your monthly salary based on the number of days you show up.

However, if the company arranged for employees to take annual leave, and the employee voluntarily gives up that year, he/she will not enjoy this treatment and will only enjoy the normal wage income for the working period.

Employees leave the company

When the employees leave the company, but still have annual leave to take, according to the employee working time of that year, the conversion method should not take off the annual leave number of days and payment should not take off the annual leave salary, but the payment for the part that is less than 1 whole day does not take off the annual leave salary.

The conversion method is:

  • (the number of calendar days in the company in the current year/365 days) × the number of annual leave days that the employee should enjoy in the whole year – the number of annual leave days in the current year that has been arranged

For new employees, the above formula is also applicable.

Group travel

The company may also arrange group travels instead of annual leave for employees, but the arrangement shall respect the individual wishes of employees, otherwise, the arrangement of travel is not applicable.

The company has to provide evidence to prove that it and the employees have agreed to discount the annual leave during the group travel. If employees do not agree, the company shall determine that the group travel organized cannot discount the annual leave of the employees, and the company shall still pay the employees the salary of the annual leave not taken.

How HROne can be beneficial to you

Our service can handle the complete employee benefits for your company in compliance with the local policies. As a non-state-owned consulting firm, we can directly hire employees for a company not having a legal entity in China by our specialized Employee Leasing / Talent dispatching services.

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