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Today, the legal risks of labour and employment are increasingly diverse and complex, requiring enterprises to enhance their management capabilities. For instance, the Notice on Strengthening the Administration of Enterprises¡¯ Injured and Ill Employees on Long-term Leave, issued in 1992, highlights the necessity for enterprises to manage employees¡¯ sick leave, particularly those on long-term sick leave.

It stipulates that an employee needing leave for an injury or illness must provide a diagnostic certificate issued by the enterprise¡¯s medical institution or a designated hospital, which must be reviewed and approved by the enterprise. This requirement emphasises the necessity for an employee to provide a diagnostic certificate and recognises the importance of the enterprise¡¯s role in reviewing and approving sick leave.

Accordingly, the sick leave application procedure, the scope of information to be submitted and the right of review are powerful tools for enterprises in managing sick leave. As workers become increasingly aware of the law and the protection of their rights, enterprises are required, since the implementation of the Personal Information Protection Law (PIPL), to revise and improve their existing sick leave management systems to balance their autonomy in managing employees with the protection of workers¡¯ privacy.

Fully incorporating in the sick leave approval procedure the compliance requirement of ¡°notification-consent¡± before processing personal information. However, article 13(2) of the PIPL allows an employer to process personal information without the individual¡¯s consent, when necessary, either for forming or fulfilling contracts where the individual is a party, or as required by legally established labour regulations and collective contracts for human resources management.

However, in cases such as sick leave applications, which may involve sensitive employee information, it is critical to standardise the objectives and procedures for processing personal information within the sick leave management system and clearly define and restrict who can access this information and proactively inform employees about these practices through reasonable methods.

Application materials submitted for sick leave required to be limited to what are reasonable and necessary. Article 6 of the PIPL specifies the ¡°smallest unit¡± principle, requiring that the collection of personal information be limited to the minimum necessary to achieve the purposes of processing and prohibiting excessive collection.

The purpose of application materials submitted for sick leave is to prove the employee genuinely needs to take leave for an illness. Enterprises should ensure that the materials required are limited to what are reasonable and necessary to avoid legal risks such as invasion of personal privacy or unlawful termination of employment contracts, etc. If, because of privacy concerns, an employee refuses to provide additional information after submitting a sick leave certificate, an assessment should be made based on the specific scenario.

Ensuring the security of personal information when processing employees¡¯ sick leave information. Once an enterprise receives employee sick leave information, it must bear information processor responsibilities in accordance with the PIPL. In cases involving cross-border data transmission, sensitive personal information in the sick leave documents, including maternity information, medical history, etc., must be anonymised, even if the transmission is for approving the sick leave.

Expanding means and measures of sick leave risk management within reasonable limits. An overly strict sick leave management system, including the application process and documentation review standards, can easily backfire on the company. If the review of sick leave applications and documents is excessively stringent, it will inevitably lead to management deadlocks, particularly when employees contest management authority on privacy grounds. To mitigate this, companies should explore additional control methods for managing sick leave within reasonable limits.

1. Managing sick leave in conjunction with annual leave policies. Pursuant to the Regulations for the Paid Annual Leave of Employees, employees with a certain number of years of seniority are not eligible for annual leave for that year once their aggregate sick leave days reach a certain number. Therefore, for employees on long-term sick leave, companies can inform them in writing that extended sick leave could affect their annual leave entitlement, thereby discouraging bad-faith sick leave requests.

2. Managing sick leave through a remuneration system. Article 59 of the Opinions on Several Issues Concerning the Implementation of the Labour Law specifies that sick leave wages during the treatment period may be less than the local minimum wage standard but not less than 80% of it.

   Although provincial and local regulations set the minimum standard for sick leave wages, in practice, they all permit enterprises to set sick leave wages through internal policies or labour contracts within certain limits. For example, article 23 of the Regulations of Shenzhen Municipality on the Wage Payment to Employees (amended in 2022) provides that sick leave wages during the treatment period must not be less than 60% of the employee¡¯s regular wage and no less than 80% of the city¡¯s minimum wage. Similarly, regulations in Jiangsu and Zhejiang provinces only restrict sick leave wages to be no less than 80% of the local minimum wage.

   These provisions allow companies to establish fair and incentivising compensation systems to reduce the incidence of employees taking unnecessary sick leave.

3. Handling dubious sick leave. It is not appropriate to uniformly raise the threshold for all employee sick leave applications. When facing a dubious sick leave application, the enterprise should put forward a reasonable request in writing, requiring the employee to further explain the application and the related medical condition, and retain written evidence of the communications. If the employee refuses for personal privacy reasons to co-operate, the enterprise should not immediately dismiss the employee for rules violation or absenteeism. Instead, the company should gather preliminary evidence to demonstrate the necessity and reasonableness of requesting detailed information supporting claims of employees¡¯ potential fake sick leave or fraudulent sick leave.

Wu Kun is a partner and Sun Linjiaying is a paralegal at Blossom & Credit Law Firm