According to Article 3 of the Provisions on the Duration of Medical Treatment for Enterprise Employees with Illnesses or Non-Work-Related Injuries (“Provisions”), employees of an enterprises who suffer illnesses or non-work-related injuries and need to cease working and receive medical treatment shall be given a 3-24 months medical treatment period depending on their actual years of service and those with the current employer. According to Article 2 of the Circular of the Ministry of Labour and Social Security on Implementing the Provisions on the Duration of Medical Treatment for Enterprise Employees with Illnesses or Non-Work-Related Injuries (“Circular”), if an employee accepts medical treatment due to special illnesses (cancer, insanity, paralysis and so on) but cannot recover within 24 months, such duration can be extended appropriately with the consent of both the enterprise and the competent labour department. However, it is not explicitly provided if the 24-month medical treatment period applies directly to employees suffering special illnesses or if the treatment period still needs to be determined by reference to their service years. This has resulted in a number of cases with conflicting views.

We carried out research on cases handled in Beijing, Shanghai and Shenzhen and following are the key points abstracted from the relevant judgments.

Key Points of the Judgments

1. Beijing: When an employee suffers special illness, it is not necessary to determine the medical treatment period on the basis of his years of service. Instead, the 24-months period directly applies.

In the labour dispute Beijing Zhaotai Group Co., Ltd. U-Town Hotel Branch v. NIE Jing ([2014] Third Intermediate People’s Court of Beijing, Civil Division, Final Decision, No.1537), the employee suffered insanity due to fright at work. Her medical history and certificate of diagnosis submitted to the court showed that she did contract a special illness as defined in the Circular. The employee claimed that the Notice of Termination of Employment Contract issued by the employer on the grounds of expiration of the medical treatment period was invalid. The employer argued that the medical treatment period calculated according to the employee's years of service had expired, and the termination was valid.

The court of second instance held that the employee’s medical history and certificate of diagnosis were sufficient to show that the employee was still receiving treatment for insanity. As Article 2 of the Circular gave the employee a maximum 24-month treatment period even before obtaining permission from the company and the competent labour department, the judgement made by the court of first instance on the illegality of the termination of employment contract by the company was appropriate. With unquestionable facts, appropriate procedure and proper handling, the court of first instance’s judgment was upheld.

2. Shanghai: When an employee suffers special illness, it is not necessary to determine the medical treatment period on the basis of his years of service. Instead, the 24-month medical treatment period directly applies.

In the contract dispute Shanghai Metro Operation Human Resource Service Co., Ltd. and Shanghai No.3 Metro Operation Co,. Ltd. v. CHEN Jia((2014) Second Intermediate People’s Court of Shanghai, Third Civil Division, Final Decision, No. 1158), the term of Chen's employment contract was from January 2, 2010 to January 1, 2013. Chen fainted at work on March 2, 2011 and then was diagnosed with organic paranoia. After the expiration of his employment contract, the company terminated the contract with him on the grounds of such expiration. In the course of the trial, Chen claimed that the termination of the employment contract was invalid and demanded resumsuption of the labour relationship.

The court of second instance held that Chen received treatment in hospital twice even after the expiration of his employment contract, suggesting that his mental disorder was not cured at the expiration of his employment contract. As the time period between the date when the employee fainted and the date of expiration of his employment contract did not exceed 24 months, a sufficiently long medical treatment period should be allowed to the employee and the labour relationship should be resumed. Because the time period from March 2, 2011, the date when Chen fainted at work, to March 1, 2013 exceeded 24 months, the court held that the labour relationship should be resumed from January 1, 2013 and end on March 1, 2013, and the employer should bear all the treatment expenses incurred during this period.

3. Shenzhen: The medical treatment period should be linked to the employee’s service years and the 24-month period does not directly apply.

In the labour dispute HU v. Shenzhen Hongmou Business Management Ltd.((2012), People’s Court of Baoan District, Shenzhen City, Labour Dispute Division, First Instance, No. 3880), the employee was diagnosed with advanced lung cancer, and he claimed that a 24-month treatment period should apply relying on Article 2 of the Circular and demanded payment of wages for that period. The employer argued that the length of the treatment period should be determined based on his actual service years, and the employee was not directly entitled to a 24-month treatment period.

The court of first instance held that, the certificate of social security submitted by the employee showed that the employee had paid social security for 109 months, which was less than 10 years. The employee joined the company in 2007 and left for medical treatment in June 2011 and the time period in between was less than 5 years. Under the Provisions, if an employee’s actual service time is under 10 years and the service time with the current employer is under 5 years, the medical treatment period shall be 3 months. Therefore, a 3-month medical treatment period should apply to Mr. Hu. The direct application of 24-month treatment period due to the lung cancer under the Circular, as claimed by the employee was inapplicable. Therefore, the medical treatment period for the employee should be 3 months.

Analysis

The two types of judgment in the above-mentioned three cases represent two different views of China’s courts in different areas.

According to the first view (Beijing and Shanghai), if an employee suffers special illness (such as cancer, insanity, paralysis), the 24-month medical treatment period directly applies and it is unnecessary to determine the length of the period based on his years of service. If the employee cannot be cured within 24 months, an extension may be granted with the consent of the company and the competent labour department.

Under the second view (Shenzhen), the medical treatment period shall still be determined on the basis of the employee’s years of service. Even in the case of special illnesses, the employee is not necessarily entitled to the 24-month treatment period. The original intention of the Provisions is that an employee suffering special illness can enjoy a maximum 24-month medical treatment period, so long as his years of service entitles the employee to that length of time for treatment. If the employee still cannot recover after 24 months, the period may be extended with permission of the company and the competent labour department.

Conclusion

Whether or not the 24-month treatment period can directly apply to employees suffering special illnesses affects both employer and employee meaningfully. During the medical treatment period, the employer shall pay minimum wages and social security contributions for the employee concerned. When the medical treatment period elapses, the employer may terminate the employment contract and stop paying social security contributions for that employee if he cannot perform his previous job duties or reassigned job duties. In practice, the different judgments made by courts have caused confusion to employers as to how to calculate and apply medical treatment period. The view held by courts in Beijing, Shanghai and other places, i.e. the 24-month medical treatment period may directly apply to employees suffering special illnesses, to some extent deprives the employer of the right to calculate the period of medical treatment according to the employee’s years of service.