On December 30, 2016, the Zhejiang Province High People’s Court issued a Reply to Several Issues Concerning Ruling on Labor Dispute Cases to guide lower courts when ruling on controversial labor dispute issues. The high court's reply should significantly influence how local judges handle labor dispute cases in Zhejiang Province (where Hangzhou and Ningbo are located).

The following are key highlights from the guidance:

Bonus: An employee cannot recover an unpaid performance bonus if the employer denied the bonus based on a duly adopted employee handbook/company policy that provides the bonus is conditioned on employment as of the bonus payment date.

Sick leave: An employer can extend an employee's probationary period by the number of sick leave days used by the employee during the probationary period.

Resignation: Even if an employee has submitted a resignation with 30 days' notice, the employee and employer are deemed to have agreed to continue the performance of the original employment contract if, after the 30 days: (i) the employee continues to work; and (ii) the company does not object to the employee continuing to work.

Non-compete: An employer is not required to pay three months' noncompete compensation if the employer waives the non-compete obligation when employment terminates.

Medical treatment period: Employees who suffer from certain severe diseases (such as cancer, psychosis and paralysis) do not automatically qualify for the maximum statutory medical treatment period (i.e. statutory sick leave), which is 24 months. Instead, the medical treatment period should be determined by the employee's total working years and specific service years with the current employer. If the employee does not recover before the end of this medical treatment period, the employee can apply to extend the medical treatment period.

Key take-away points:

Companies operating in Zhejiang province should welcome this guidance not only for the clarity it brings on controversial labor dispute issues but also for its specific positions on certain of those issues — particularly the enforcement of employee handbook bonus policies. However, companies operating outside Zhejiang province should not assume courts in other provinces and cities will reach similar conclusions on these issues. Those companies should ensure that they are familiar with the local court view on these issues.