China’s Labor Contract Law specifies an employer’s obligation regarding the provision of rest days, statutory holidays, and annual leave. From the employee’s perspective, China’s holiday and vacation/leave policies are relatively unfavorable by comparison with those of other countries, in some cases barely passing the minimal requirement set forth by the International Labor Organization. Thus, many foreign and domestic companies choose to go beyond the legal minimum and offer employees more annual leave and rest days. More competitive labor markets in China may necessitate this to attract and retain quality employees.
Rest Day Policy
Employees are entitled to one full rest day in a seven-day period. This must be a full 24-hour period in which the employee does not work. Companies are permitted to organize rest days around production and work schedules. Regular rest days in China typically fall on Saturday and/or Sunday, though this is not a legal requirement.
All employees are entitled to the following statutory holidays:
- New Year’s Day
- Lunar New Year’s Day (Called Chinese New Year or Spring Festival)
- Qing Ming Festival (Tomb-Sweeping Day)
- Labor Day (falls on the 1st of May)
- Dragon Boat Festival
- Mid-Autumn Festival
- National Day (falls on the first day of October)
When a Holiday Occurs on a Rest Day ► When a holiday falls on a Saturday or Sunday, the following day is substituted as the rest day.
Holiday Pay ► The employer must pay the employee the full wage during a holiday. The wage can be calculated as the average daily wage based on the employee’s history.
Work During Holidays ► An alternative holiday arrangement can be made but must occur no more than 60 days before the statutory holiday.
Employment Vacation Policy
Minimum Annual Leave
According to Chinese employee vacation law, the statutory minimum annual leave is based on the employee’s years of work experience.
Chinese leave policy is not generous by comparison to most Western companies. Companies may offer more leave, so long as it is formalized in company policy and the employee is notified. Writing it in the HR handbook should suffice.
There are circumstances in which the employee is not entitled to the standard leave provision:
- If the employee takes 20 or more days of personal leave without salary deducted.
- For employees that have taken sick leave of 2 months or longer, provided that the employee has worked between 1 and 10 years.
- For employees that have taken sick leave of 3 months or longer, provided that the employee has worked between 10 and 20 years.
- For employees that have taken 4 months or longer of paid annual leave, provided the employee has worked 20 or more years.
- If the employee is entitled to a seasonal holiday (Summer or Winter holiday) that is at least as long as the annual leave.
Leave does not include rest days or public holidays
Compensation for Unused Annual Leave
Employers are required to compensate the employee for untaken paid leave. In addition to regular salary, the employer is required to pay the employee 200% of the employee’s daily wage for each day of untaken paid leave, where:
Daily wage = monthly salary / 21.75
This is not required for days of paid leave beyond the specified law. For instance, if the company offers more paid leave than that specified by law, the company may not be required to compensate for these days of untaken leave. In the event that the employer is unable to give the employee their entitled leave, they must compensate the employee with 300% of the normal compensation.