If Employee Has Cancer, can Chinese Company Terminate the Labor Contract through Negotiation?

In China, sickness of the employee is always a troublesome thing for the employer, because the employer needs to pay normal salary, but the employee may not work normally.

If you have a company in China, and your employee unfortunately suffers from cancer, which leads to frequent inability to work, or greatly reduces the workload he/she can undertake, you may consider to stop him/her hiring. Given that, you need to justify the dismissal, furthermore, you may wonder whether it breaks the Chinese law, and whether you need to pay compensation to the employee.

Based on judicial practice and in accordance with the Chinese Labor Contract Law, the employer may negotiate with the employee to terminate the employment contract if there are no legal reasons to terminate the contract. For you, as an employer, the following matters need to be noted, which are briefly listed here.

1. Employer and Employee Make Consensus on Termination of Employment Contract

According to the Chinese laws, employees suffering from cancer enjoy a medical treatment period, and this period is at least 2 years. And it should be noted that if the employee cannot work normally during the medical treatment period, the employer still cannot unilaterally terminate his labor contract, otherwise the employer will break the relevant laws.

Without the employee’s consent, you unilaterally terminate his employment contract, this employee has legal right to sue you to the court, and request to continue to perform the contract, or request you to pay damage for illegal termination. Please refer to clause 3 below for the calculation of damage.

2. With Mutual Consent, Employer Still Need to Pay Economic Compensation to Employee

If the negotiation is initiated by you, and the employee agrees to terminate the labor contract through negotiation, according to Article 47 of the Chinese Labor Contract Law, you need to pay economic compensation to this employee.

Please note that the economic compensation for legal termination is different from the compensation for damage for illegal termination of employment contract.

3. Calculation of Economic Compensation and Damage

(1) Calculation of Economic Compensation

In the case that you should pay economic compensation, the worker should be paid one month's salary for each full year of service in the employer.

If the employee has worked for you for more than six months but less than one year, it shall be calculated as one year. If less than six months, it shall be calculated as 0.5 year.

If the employee's monthly salary is not more than three times of the average monthly salary in the previous year published by the city government (“average monthly salary”), the economic compensation will be calculated like this:

the number of years the employee has worked for you × the amount of employee's monthly salary

If the employee's monthly salary is three times higher than the average monthly salary, the economic compensation will be calculated like this:

the number of years the employee has worked for you × the average monthly salary × 3

The term "monthly salary" as mentioned above refers to the employee's average salary for 12 months before the termination of the labor contract.

If the employee's monthly salary is three times higher than the average monthly salary, you only need to pay economic compensation for 12 months at most.

(2) Calculation of Damage

According to the Chinese laws, the damage is twice as much as economic compensation.

For more professional information and suggestions about labor issues in China, please contact Landing Law Offices to speak with one of our experienced Chinese lawyers.