Answer: The law stipulates that the purpose of the medical care leave for illness or non-work-related injuries is, on the one hand, to ensure employees¡¯ entitlements to medical care leave during the period of treatment for the sick or injuries and, on the other hand, to set an upper limit of liability for the employer, so that the employer can conditionally and legally terminate the employment relationship after the expiration of the medical care leave.
If an employee has not recovered after the expiration of the medical care leave, the following situations may occur:
The first situation is that the employee does not have a medical certificate to continue treatment, including circumstances where the employee has recovered or the employee just personally feels that he has not recovered. In this case, in principle, the employee should return to work. The employee should abide by company rules and should not unreasonably refuse to work. Of course, the employer can also consider the possibility that the employee may not recover physically, and adjust the position of the employee based on their ability when necessary. If the employee’s employment contract has expired at this time, the company can terminate the employment relationship.
The second situation is that employee has a medical certificate requiring continuous treatment, but no application for labor capacity appraisal has been submitted. The most common situation is that although the employee has a medical certificate that requires recuperation or treatment, it does not show that the employee is disabled. At this time, from the legal point of view, the employer can be regarded as having exhausted its obligations through the employee’s medical care leave, and can terminate the contract according to Article 40 of the Employment Contract Law. That is, the company must first arrange a position transfer for the employee, and if the employee is still not competent for the job, the company can terminate the employment relationship and pay economic compensation. Please refer to How to calculate economic compensation? If the employee’s employment contract has expired at this time, the company can also terminate the employment relationship on the grounds of contract expiration.
When the employer implements the aforementioned procedure of position transfer and termination, the employee may not be able to go to work because he has not recovered. At this time, the employer shall not terminate the employee’s employment relationship for serious violation of company rules in principle, otherwise it may constitute illegal dismissal. 1Appeal of labor dispute between Yichang Yiren Human Resource Service Co., Ltd. and Deng Qingsong Civil Judgment of Intermediate People’s Court of Yichang City, Hubei Province (2015) E Yichang Zhong Min San Zhong Zi No.00058.The correct practice for the employer is to terminate the job on the ground that the employee has not recovered for returning to work after the position transfer, being heath-incompetent for the job, and the employer pays the employee economic compensation. Of course, if the employee still unreasonably refuses to communicate with the employer after the employer reaches out, and also refuses to negotiate the return and position transfer, the employer can also dismiss the employee for serious violation of company rules.
It should be noted that if the employee has obviously lost part or all of the labor capacity, the employer should apply for, or remind the employee to apply for and cooperate with, the labor capacity appraisal (even if the fixed-term employment contract has expired), instead of directly terminating the employee’s employment contract on the ground of the aforementioned medical care leave expiration.2Civil Judgment of the Second Instance of the Labor Dispute between Guang’an Security Group Co., Ltd. and Liu Jianguo Civil Judgment of the Intermediate People’s Court of Guang’an City, Sichuan Province (2020) Chuan 16 Min Zhong No.1371. In this case, the court held that after the expiration of the medical care leave for acute stroke, the employee was dismissed directly according to his health incompetence at the expiration of the medical care leave without assessing the necessity of labor capacity appraisal, and that was an illegal dismissal. Sheyang Yongan Machinery Co., Ltd. and Zhou Juntao Labor Dispute Appeal Case Jiangsu Yancheng Intermediate People’s Court Civil Judgment (2018) Su 09 Min Zhong No.192. In this case, after the expiration of the medical care leave of the employee suffering from schizophrenia, the employer dismissed the employee on the grounds of health incompetence after the expiration of the medical care leave without applying for labor capacity appraisal. The court held that this constituted illegal dismissal. However, there are also cases to the contrary. Gangyongde and Liaoning Shiling Property Co., Ltd. Huanggu Branch Labor Dispute Second Instance Judgment, Liaoning Shenyang Intermediate People’s Court Civil Judgment (2022) Liao 01 Minzhong No. 11945. In the case, the employee’s labor capacity due to cerebral hemorrhage was identified as total incapacity. Before the conclusion of the appraisal, the employer terminated the employment contract by paying economic compensation and payment in lieu of notice on the ground of health incompetence at the end of the medical care leave. The court held that workers who have lost their labor capacity should withdraw from their roles, indicating that the law allows employers to terminate their employment contracts according to law. Moreover, the employee has initiated employment arbitration to claim punitive damages for the termination of the employment contract before the conclusion of the labor capacity appraisal, indicating that he recognizes the fact that the employment contract has been terminated and he does not advocate the restoration of employment relationships. Therefore, the conclusion of labor capacity appraisal can not prevent the company from exercising the right to terminate the contract according to law before that. We believe that the real reason is not that the employer has the right to terminate before the appraisal conclusion, but that the employee has recognized the fact of termination by claiming punitive damages for illegal termination, rendering the employee’s abandonment of the entitlements after the labor capacity appraisal.Of course, if the employee refuses to cooperate with the appraisal after the employer has applied for the labor capacity appraisal and does not return to work, it may also constitute a serious violation of company rules, and the employee may be legally terminated.3Civil Judgment of the Second Instance of the Labor Dispute between Wang Xiuhong and Beijing Muleidi Fashion Co., Ltd. Civil Judgment of the Third Intermediate People’s Court of Beijing (2022) Jing 03 Min Zhong No.8532. ¡°After the expiration of the medical care leave, Wang Xiuhong refused to go to work and refused to cooperate with the labor capacity appraisal, so the termination of the employment relationship with Wang XiuHong is legal.¡±
The third situation is that the employee has obtained a labor capacity appraisal. If the appraisal result confirms that there is no disability, the employer may require the employee to return to their position, or the employer may consider the possibility that the employee’s has not physically recovered and then transfer an appropriate job for him according to Article 40 of the Labor Law. If the employee still refuses or is not competent for the job, the employer may terminate the contract. If the employee’s employment contract has expired at this time, the company can also terminate the employment relationship on the ground of contract expiration. If the employee is identified as disabled, they shall proceed with illness-retirement or a position transfer according to the disability level of the employee. Please refer to The labor capacity appraisal has a conclusion after my medical care leave expires. What should I do?
The fourth situation is that the employee has applied for labor capacity appraisal, or has applied for extension of medical treatment due to medical entity¡¯s requirement for further treatment or special diseases (such as cancer, mental illness and paralysis), and is currently waiting for the appraisal conclusion or approval of extension of medical treatment. 4Article 76 of the Opinions on Several Issues Concerning the Implementation of the Labor Law of the People’s Republic of China by Ministry of Labor. ¡°For some employees who suffer from special diseases (such as cancer, mental illness, paralysis, etc.) and who cannot recover within 24 months, the medical care leave may be extended appropriately with the approval of the enterprise and the local labor department.¡± In this case, even if the employee’s fixed-term contract has expired, the employer shall not terminate the employment relationship and shall continue to pay the employee’s wage according to the standard of medical care leave. Please see How should our company pay our employees during their sick leave?
We have observed that the treatment of employment relationships after the expiration of employee’ medical care leave for illness and non-work-related lacks legal rules, causing uncertainties in practice. This situation is very similar to the treatment of employment relationships after the expiration of work-related injury leave for work-related injuries and occupational diseases.
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Mr. Dong Wang has been in practice for over 20 years, specializing in business law, including employment law, commercial law, company law, and intellectual property law. Mr. Wang has earned respect and trust from his clients due to his professionalism, fidielty, and kindness.
Email: wangdong@royalaw.com
- 1Appeal of labor dispute between Yichang Yiren Human Resource Service Co., Ltd. and Deng Qingsong Civil Judgment of Intermediate People’s Court of Yichang City, Hubei Province (2015) E Yichang Zhong Min San Zhong Zi No.00058.
- 2Civil Judgment of the Second Instance of the Labor Dispute between Guang’an Security Group Co., Ltd. and Liu Jianguo Civil Judgment of the Intermediate People’s Court of Guang’an City, Sichuan Province (2020) Chuan 16 Min Zhong No.1371. In this case, the court held that after the expiration of the medical care leave for acute stroke, the employee was dismissed directly according to his health incompetence at the expiration of the medical care leave without assessing the necessity of labor capacity appraisal, and that was an illegal dismissal. Sheyang Yongan Machinery Co., Ltd. and Zhou Juntao Labor Dispute Appeal Case Jiangsu Yancheng Intermediate People’s Court Civil Judgment (2018) Su 09 Min Zhong No.192. In this case, after the expiration of the medical care leave of the employee suffering from schizophrenia, the employer dismissed the employee on the grounds of health incompetence after the expiration of the medical care leave without applying for labor capacity appraisal. The court held that this constituted illegal dismissal. However, there are also cases to the contrary. Gangyongde and Liaoning Shiling Property Co., Ltd. Huanggu Branch Labor Dispute Second Instance Judgment, Liaoning Shenyang Intermediate People’s Court Civil Judgment (2022) Liao 01 Minzhong No. 11945. In the case, the employee’s labor capacity due to cerebral hemorrhage was identified as total incapacity. Before the conclusion of the appraisal, the employer terminated the employment contract by paying economic compensation and payment in lieu of notice on the ground of health incompetence at the end of the medical care leave. The court held that workers who have lost their labor capacity should withdraw from their roles, indicating that the law allows employers to terminate their employment contracts according to law. Moreover, the employee has initiated employment arbitration to claim punitive damages for the termination of the employment contract before the conclusion of the labor capacity appraisal, indicating that he recognizes the fact that the employment contract has been terminated and he does not advocate the restoration of employment relationships. Therefore, the conclusion of labor capacity appraisal can not prevent the company from exercising the right to terminate the contract according to law before that. We believe that the real reason is not that the employer has the right to terminate before the appraisal conclusion, but that the employee has recognized the fact of termination by claiming punitive damages for illegal termination, rendering the employee’s abandonment of the entitlements after the labor capacity appraisal.
- 3Civil Judgment of the Second Instance of the Labor Dispute between Wang Xiuhong and Beijing Muleidi Fashion Co., Ltd. Civil Judgment of the Third Intermediate People’s Court of Beijing (2022) Jing 03 Min Zhong No.8532. ¡°After the expiration of the medical care leave, Wang Xiuhong refused to go to work and refused to cooperate with the labor capacity appraisal, so the termination of the employment relationship with Wang XiuHong is legal.¡±
- 4Article 76 of the Opinions on Several Issues Concerning the Implementation of the Labor Law of the People’s Republic of China by Ministry of Labor. ¡°For some employees who suffer from special diseases (such as cancer, mental illness, paralysis, etc.) and who cannot recover within 24 months, the medical care leave may be extended appropriately with the approval of the enterprise and the local labor department.¡±