National and Guangdong Local Interpretations re Annual Leave Regulations

Summary

According to the annual leave regulations issued last year, an employee working for a continuous period of 12 months is entitled to take paid annual leave; while the minimum annual leave entitlement depends on the cumulative working period with any employer. However, it is unclear whether the continuous 12-month period includes the employee's service period with any employer, or only the current employer.

In April, the PRC Ministry of Human Resources and Social Security ("HRSSM") has made it clear that the employee's service years with any employer shall count for the above 12-month period ("HRSSM Interpretation"). However, some local annual leave rules issued by the Guangdong Human Resources and Social Security Bureau ("Guangdong Interpretation") appeared to stipulate differently on this issue.

Full Update

HRSSM Interpretation

HRSSM Interpretation mainly includes the following two updates:

A. Continuous Working Period
The employee will be deemed as having worked for a continuous period of 12 months if he/she:

• has worked for his/her current employer for a continuous period of 12 months; or
• has worked for any employers for a continuous period of 12 months.

B. Cumulative Working Period
According to the HRSSM Interpretation, the cumulative working period includes:

• the employee's full-time working period with any government, social organisation, enterprise, non-profit organisation operated by the government, non-governmental and non-profit organisation, and privately owned business;
• a period when the employee serves in the army;
• any period which is deemed as working period in accordance with any applicable laws and regulations.

The employee's cumulative working period can be proved by means of archival record, the employer's payment record of social insurance contributions, employment contract or other valid documents.

Guangdong Interpretation

A. Continuous Working Period
The phrase "employee working for 12 continuous months" means employees who have worked for their current employer for 12 continuous months.

In case any of the following two circumstances occurs, the employee's working period with an ex-employer shall be included for calculation of the 'continuous working period':

• the employee is transferred among various employers, and such transfer has been reviewed and approved by the local labour/human resources authority or organisation department (we understand that this circumstance applies to the transfer of civil servant, employees of state enterprise, etc.);
• the ex-employer arranges for the employee to work for a new employer for a reason not attributable to the employee.

B. Cumulative Working Period
The Guangdong Interpretation is the same as the HRSSM Interpretation on this point.

In addition, the Guangdong Interpretation prescribes that employees cannot take annual leave if their continuous working period is less than 12 months, even if their cumulative working period has been 12 months or more.

C. Leave Taking Arrangement
Under the Guangdong Interpretation, if the employer fails to arrange for the employee to use up all entitled days of annual leave by the end of the year when such leave is earned, the untaken annual leave can be carried over to the next year, as long as both the employer and employee so agree. However, an agreement that the employee takes no annual leave for two continuous years is generally not allowed.

D. Record Keeping Obligation
Under the Guangdong Interpretation,

1. the employer is obliged to keep a record of the taking of annual leave by an employee. Such record shall include the original copy of documents such as an offer letter, employment contract, employment/unemployment registration manual, termination/expiry letter or agreement. The above record shall be handed over to the next employer, which is the basis of calculation of the concerned employee's annual leave entitlement;
2. the employee cannot enjoy annual leave entitlement repeatedly with different employers. The status of the employees' taking of annual leave (e.g. the days of accrued, but untaken, annual leave and whether payment in lieu has been paid) shall be expressly stated in the termination/expiry letter or agreement.

E. Part-time Employees
Under the Guangdong Interpretation, part-time employees are not entitled to any annual leave entitlement.

For inquiries related to this Client Alert, please contact:

Andy Yeo (andy.yeo@mayerbrown.com)

Rachel Zhang (rachel.zhang@mayerbrown.com)

Learn more about our PRC offices and Employment & Benefits practice.