Court: Employees cannot be forced to set off quarantine against leave

Employees quarantine leave

The Xiaoshan District Court in Hangzhou municipality recently held that the quarantine leave taken during the pandemic may not be set off against an employee’s annual leave entitlement.

In March 2022, the court supported an employee’s claim of illegal dismissal and ordered her employer to pay a total of more than RMB90,000 (USD12,650) in damages for illegal termination of her employment contract, salary in lieu of unused annual leave in 2019 and 2020, and travel allowance.

While the employee was quarantined at home due to the covid-19 pandemic, she received a notice that her department was being shut down and she received a contract termination notice from her company. The company, in addition to arguing the termination was lawful, argued that the resumption of work had been delayed by the pandemic and that the leave taken during the delay could first be set off against the employee’s unused days of annual leave.

In its judgment, the court held that leave during the pandemic may not be set off against annual leave. The employer had not reached agreement with the employee on offsetting leave against her annual leave entitlement during the pandemic and, further, it had failed to notify the employee. The employer should pay the compensation in full for the unused days of annual leave.

The above-mentioned judgment signals that if a company wishes to require its employees to set off their home quarantine period during the pandemic against their annual leave, it would be safest to discuss the matter with the employees and obtain their consent beforehand.

The Regulations on Paid Annual Leave of Employees states that while companies should consider employee wishes when arranging annual leave, ultimately companies may arrange annual leave for their employees in a co-ordinated manner based on their overall business situation.

While this implies that companies generally have the final say regarding annual leave, in a special situation where an employee is under a mandatory quarantine order, the government’s main policy goal is to ensure such quarantine has no negative impact on employees’ rights and interests, in order to ensure full compliance with quarantine policy.

Business Law Digest is compiled with the assistance of Baker McKenzie. Readers should not act on this information without seeking professional legal advice. You can contact Baker McKenzie by e-mailing Howard Wu (Shanghai) at