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  • Annual Leave, Welfare or Pressure

    Annual Leave, Welfare or Pressure

    In order to improve the employee’s welfare, Company A has stipulated an additional paid annual leave, which is 5 days, in its “Employee Handbook”. However, such employee’s welfare becomes Company A’s pressure. When an employee plans to resign, he would arrange the additional paid annual leave in whole, or require the company to pay remuneration for such additional paid annual leave rating 300% of his daily wage rate. Company A insists that the additional paid annual leave is not the statutory paid annual leave, so it shall be entitled to reject the employee’s requirements on taking the additional paid annual leave or paying remuneration, while the employee is going to resign.

    This is a typical case, which represents the wrongful management on the statutory paid annual leave. The fundamental reason is that Company A fails to manage the statutory paid annual leave and the additional paid annual leave separately, and also fails to set restrictions on the usage of and compensation for the additional paid annual leave.

    According to “Implementation Measures for Paid Annual Leave for Employees of Enterprises” Article 13, the day of annual leave due and the payment for the annual leave time as stipulated in the labor contract collective contract or regulated in the rules and regulations of enterprise which is higher than the standard provisions by laws, the employer shall carry it out according to the concerning agreements or regulations. In the above case, in the “Employee Handbook”, Company A has stipulated the day of annual leave more than the standard provisions by laws, but failed to stipulate the restrictions on the additional paid annual leave, then the dispute has arisen.

    In view of this, we recommend the following tips for the employer to design its additional paid annual leave:

    Firstly, in order to avoid any confusion on the statutory paid annual leave and additional paid annual leave, it would be better to stipulate the day of the additional paid annual leave separately. In addition, it would be better to specify whether the additional paid annual leave could span beyond 1 year.

    Secondly, in order to manage the cost, it would be better to specify the sequence for the statutory paid annual leave and the additional paid annual leave. For example, in a calendar year, the additional paid annual leave could be taken upon the consumption of the statutory paid annual leave.

    Finally, to clarify the rules on the arrangement and compensation of the additional paid annual leave, which mainly include: (a) whether the employee could take the additional paid annual leave while he plans to resign; (b) whether the employer should compensate while the additional paid annual leave has not been taken in a calendar year, and so on.