Welcome to the May edition of International Law at Work. This edition is a themed issue on the topic of sickness and incapacity, and compares the law relating to sickness and other related issues in a number of jurisdictions where Taylor Wessing operates. We do hope you will find the content of this newsletter useful and encourage you to contact us should you have questions on the topics we deal with in this edition or any other matter.
This edition contains a table comparing the jurisdictions, as well as individual articles for each jurisdiction.
- Table containing jurisdiction by jurisdiction analysis(http://www.taylorwessing.com/fileadmin/files/docs/ILAW-sickness-and-incapacity.pdf")
The 'Ausfallsprinzip' ('Principle of Loss Compensation')
In Austria, the system of continuation of payments in cases of sickness or incapacity is dominated by the 'Principle of Loss Compensation' and is therefore extremely employee-friendly.
The Principle of Loss Compensation states that an employee, who is unable to work due to sickness, accident or a medically recommended stay at a health resort must, in financial terms, be treated as if he were able to work for a certain period of time. This period of time depends on years of service and varies from six to twelve weeks.
This means that the employee must be granted the same salary he would have earned had he been working during his actual absence and therefore the salary equivalent is not limited to base salary but also includes overtime, bonus payments and usual commission.
Where an employee has a commission agreement guaranteeing commission upon reaching specific sales targets in a calendar month, the drawback of the system becomes evident. If the respective employee is absent from work for, for example, three weeks in one calendar month, the employee will receive an average (full) salary during the period of sick leave, taking overtime, bonus payments, usual commission into account according to the Principle of Loss Compensation.
In addition, if, for example, an employee only works one week in a calendar month, the employee will probably not reach the required monthly sales target in that week and will not therefore be eligible to earn commission. As this has not been tested in the courts in Austria, according to the prevailing opinion in literature, the Principle of Loss Compensation goes so far as to reduce the required sales target in order to give the employee the chance to achieve his target and not to make gaining commission impossible. In other words, the principle not only protects the time of absence but has to be construed as having effect on the actual working period as well.
In China, all employees enjoy a statutory medical treatment period in case of non work-related sickness. Employers should be aware that in the case of occupational diseases or work-related injuries, work-related injury rules apply which are significantly different from normal sick leave and non work-related injury rules.
Employees enjoy dismissal protection during the statutory medical treatment period, except in cases where a termination without notice is permitted. The length of the statutory medical treatment period depends on:
- the employee’s accumulated working years with all employers; and
- the length of the employee’s service with the current employer.
The table below is an example of how this works in practice, but in some cities, such as Shanghai, the thresholds may vary:
Click here to view the table.
Sick pay is usually also regulated by local legislation. In many areas, the amount of sick pay is equal to the full salary if the employee has exceeded a certain number of working years. Whereas in other areas only a certain minimum (e.g. 80% of the local minimum monthly salary) must be paid.
Employers usually set up their own sickness policies regulating sickness absence procedures and levels of sick pay. Careful drafting of such policies is important. We recommend that these policies are reviewed at regular intervals and at least once every two years.
In the Czech Republic, employees have the right to receive sick pay which usually corresponds to 60% of an employee's average earnings.
Employees receive sick pay as follows:
- the first three days – no sick pay;
- the fourth to fourteenth day – sick pay paid by the employer; and
- after the fourteenth day - payments from public sickness insurance.
In 2012 – 2013 the period of sickness covered by the employers ended on the twenty-first day (as a part of the budgetary measures of the Czech government).
The employer is entitled to check whether an employee who has been certified as temporarily unfit to work is complying with the prescribed regime of an insured person who is temporarily unfit to work, as set out in the Health Insurance Act. This requires employees to stay at their place of residence and comply with the time and scope of permitted absence from home. An employee is obliged to allow the employer to verify compliance with these obligations. This right of the employer is, however, limited to the first 14 days of sickness. Until recently, breach of this obligation by an employee was a reason for withholding sick pay, but not grounds for termination. From 1 April 2012, a gross breach of this obligation is grounds for termination upon notice.
According to the Czech Labour Code it is possible to agree a probation period (up to three months in the case of regular employees and up to six months in the case of managing employees). During a probation period it is possible to terminate employment without notice and without providing grounds for termination. In relation to sickness during a probation period the following applies:
- the probation period is prolonged by the days for which the employee was unable to work due to sickness; and
- it is not possible to terminate employment in the first 14 days of incapacity.
In France, a distinction has to be made between 'ordinary illness' and 'occupational/work-related illness'.
In both cases, the employment contract is suspended during sick leave, except for remuneration and the loyalty obligation which continues to bind the employee.
Ordinary illness, which prevents the employee from temporarily performing his job, only suspends the employment contract if the sick leave is certified by a medical certificate.
If the sickness has a professional or work-related origin, the duration of sick leave has, in principle, no importance and the employment contract remains suspended even if the employer needs another person to replace the absent employee.
When ordinary sick leave lasts more than 30 days or if the employee is suffering from a work-related illness, the employee must be examined by an occupational health doctor and declared able to work prior to returning to the company. The doctor may also declare the employee able to return to work under certain conditions. The employer must comply with these recommendations and adapt the employee’s position if necessary. This may include, for example, a temporary change to their working hours.
Regardless of whether the sickness is work-related or not, the employee is entitled to return to his previous position or a similar one at the end of the leave (with equivalent qualifications and remuneration), unless the employee is declared unable to perform their function.
If the doctor declares that the employee is not totally able to work, the employer must research suitable alternative positions not only within the company but also within other group companies (if any). The employee can refuse the alternative position if it does not match the employee's qualifications and remuneration and the medical recommendations. If there is no suitable alternative position, the employer may dismiss the employee for physical inability. The dismissal is not based on the employee's illness but on the consequences that their absence has on the company. Such a dismissal implies requires payment of a dismissal indemnity, which is doubled if the sickness is work-related.
The research into a suitable alternative position and/or the dismissal procedure must take place within one month of the doctor's recommendations. If not the employer must reinstate the payment of the employee’s full remuneration.
In Hungary, an employee is entitled to 15 working days of paid sick leave per year according to the Labour Code. After the expiry of this period the employee is entitled to statutory sick pay provided that he or she satisfies the qualifying requirements.
Sick leave is provided for 15 working days per year of the period of incapacity, and 70% of salary is paid for this period. This period is completely financed by the employer and it is subject to personal income tax and social security contributions.
In the case of an employee who is not able to work for more than 15 working days per year, statutory sick pay may be provided for up to one year by the National Health Insurance Fund Administration of Hungary (OEP) for those who are (i) unable to work; (ii) have an insurance relationship; and (iii) required to pay a monetary health insurance contribution. 30% of the sick pay is reimbursed by the employer to the OEP.
If the uninterrupted insurance relationship of the employee lasted for less than one year prior to the first day of incapacity for work, statutory sick pay will only be provided for the period covered by such uninterrupted insurance relationship.
The amount of statutory sick pay depends on the length of the insurance period prior to the incapacity. It amounts to 60% of the daily average salary in the case of an insurance relationship of 2 years or more and 50% if the period of insurance is less than two years.
If an insured person has received statutory sick pay within one year of the first day of incapacity for work, this duration shall be deducted from the eligibility for statutory sick pay on the new grounds of incapacity.
In Poland, employees have the statutory right to paid leave from work as a result of sickness. In addition, an individual’s employment contract cannot be terminated whilst on sick leave. This often results in abuse of the right to sick leave. There are some instances where malingering employees are issued with sick notes by medical practitioners, allowing them to receive remuneration and sick pay and, at the same time, secure them from being dismissed. It is common for an employee who is informed in advance of a planned termination, to go on sick leave. For this reason it is advisable to ensure that an intended dismissal is kept confidential until the employee is notified in writing, if not the employer must wait until the employee returns to work in order to terminate the employment and, as a result, the termination can be suspended for weeks or even months. If an employer suspects an employee is malingering, the Social Insurance Institute (the 'ZUS') can be informed. The ZUS will summon the employee to a medical examination to verify the individual’s actual medical condition. The employer can also check whether the employee actually remains at their place of residence during the period of sick leave.
There is a difference between small and large companies in Poland regarding sick pay. Employers who employ more than 20 employees pay the whole period of sickness. Employers employing 20 employees or less pay only the first 33 days of sick leave in a given calendar year. For the remaining period the entire amount of sick pay is paid by the ZUS. The number of employees (more or less than 20) is verified once a year on 30 November and this number is set for the whole of the following year.
The total number of days of sick leave that an employee has taken during their employment with any given employer is recorded in the employment certificate, which is issued at the end of the period of employment. It is a document which prospective employers often request from candidates in order to verify how often the potential employee has been on sick leave.
On 1 April 2014, the Employment Act (the 'EA') was amended to provide that employers are not required to grant paid sick leave or bear the medical consultation fees for employees seeking or undergoing medical treatment which, in the opinion of the doctor performing the examination, is for cosmetic purposes (e.g. mole removal or nose jobs). In addition, the sick leave benefits under the EA were extended to individuals employed in a managerial or executive position who earned a basic monthly salary of up to S$4,500.
In 2010, the EA was amended to provide that a breach of the statutory provisions relating to sick leave under the EA may constitute an offence. First time offenders are liable on conviction to a fine up to $5,000. Subsequent offenders may be fined up to $10,000 or to imprisonment for a term up to 12 months or both.
The EA also provides that employees are not entitled to paid sick leave for the period during which they are receiving or are entitled to receive compensation for temporary incapacity under the Work Injury Compensation Act. Generally, the employee is entitled to full earnings for a period of 60 days if he is hospitalised and 14 days if he is not hospitalised. Thereafter, the employee is entitled to a further payment of an amount equal to two-thirds of his earnings during the period of incapacity or during a period of one year, whichever period is shorter.
In Slovakia, employees are entitled to paid time off for the period of incapacity. After one year of paid leave for incapacity/illness, the health of the employee will be examined by a commission (appointed by the Social Security Agency). One outcome of this examination is that the employee may be declared disabled.
If the employee returns to work as a disabled individual and, based on the medical examination, it is formally declared that the employee is not able to perform his/her work, the employer is obliged to offer a suitable alternative position. Where the employer is not able offer the employee any other suitable alternative position, it is entitled to terminate the employment with notice. If the employer intends to terminate the employment of a disabled employee, the employer must receive approval from the competent national Office of Labour, Social Affairs and Family.
In the UK, employees do not have a statutory right to time off work as a result of sickness. It is however common for employers to include such a right in the employment contracts of their employees.
There is no right to receive full pay whilst off work due to sickness. Provided an employee satisfies the qualifying requirements, they will be entitled to receive statutory sick pay. It is however common for employers to grant more generous sick pay allowances under their employment contracts, for example 10 days full pay, although these provisions vary greatly between companies. Employers can, and often do, set out more onerous notification requirements in order for an employee to receive contractual sick pay.
Employees do not have a statutory right to time off for medical appointments where these are of a routine nature only and if the employee is fit to attend work. This may be dealt with in the employment contract, although this is not common and are generally granted at the discretion of the employer only.
It is advisable that employers ensure that they have an established sickness policy in place that sets out the procedure that the company will follow in the event that an employee is unable to attend work due to sickness. This should also contain the certification requirements for the employee to follow i.e. what notification the employee must provide to the employer in order to receive sick pay.
Ukrainian sickness legislation is generally employee-friendly. Employees working for a company, sole traders or self-employed persons are entitled to time off work due to sickness.
The employees have the right to receive 60-100% of average salary whilst on sick leave depending on their length of service (60% for 5 years or less, 80% for 5-8 years, 100% for more than 8 years and certain groups of employees under additional social protection). Some employees may be offered additional sick leave and sick pay benefits under individual employment agreements (this is more common for senior executives). Sickness absences do not reduce the regular number of days of annual paid leave and additional annual leave related to children. Female employees are entitled to sick pay on ordinary maternity leave (of 126 – 180 days). Additional maternity/paternity leave until a child reaches 3 years (sick pay and sick leave are not available) or even until a child reaches 6 or 16 years (for medical reasons) are also allowed.
The employee is also protected from dismissal during the first four months of uninterrupted sick leave, which may be further extended for a period of vacation and/or additional maternity/paternity leave.
Employees are also entitled to receive sick pay and other social insurance payments due to sickness, incapacity or disability after termination of employment.
There are risks in relation to work-related injuries causing sickness absence in cases of winding up a company in the Ukraine (insolvency, shareholders' decision etc.), including the closure of a local office of a foreign company.
Under Ukrainian Law and according to the recent case law, the Social Insurance Fund is entitled to claim from the former employer payments to cover all existing and future expenses, to be borne by the Social Insurance Fund on social insurance payments to the former employees of the company. In certain cases the amount of such claims may be significant as the future payments are based on the amount of employee’s salary and may be life-long (e.g. in case of disability due to work-related illness or injury).