Baker & McKenzie reports that an employment dispute arbitration panel in Xuanwu district, Beijing, has ruled that an employee’s statutory annual leave entitlement must be calculated according to the calendar year, and that an employer and employee cannot agree to use another 12-month period for this purpose.
In this case, the employer and the employee orally agreed to calculate the statutory annual leave with reference to the one-year period starting from the date on which the employees started work at the company. The employee then took all his annual leave days in one month, and took no annual leave during the next calendar year.
Despite the fact that the employee used all his annual leave days during the time period agreed upon by the parties, the arbitration panel ruled that because the employee did not take any annual leave during the following calendar year, the employer was required to pay 300% compensation for the employee’s unused statutory annual leave for that year.
Companies that calculate employees’ annual leave entitlement based on their own company policies and not based on the calendar year are therefore exposed to legal risk.
