The Regulations on Paid Annual Leave for Employees have finally gone into effect. The following are some issues of particular concern to Hong Kong businesses on the mainland. They are advised to have a good grasp of the regulations as soon as possible to avoid getting into disputes with their employees.

(1) How many days of leave is an employee entitled to have after working for six years?

Some units originally offered employees "10 days annual leave after completing five years of service". But under the new regulations, employees are entitled to five days of annual leave after working accumulatively for 1-10 years, 10 days of leave after working accumulatively for 10-20 years, and 15 days of leave after working for over 20 years. Against this backdrop, how many days of leave is an employee entitled to have after working for six years?

According to experts, the new paid annual leave regulations cover a wide spectrum, and employees working in government departments, organisations, enterprises, public institutions, private non-enterprise entities and individually-owned businesses are protected by the regulations. The annual leave mentioned in the regulations refers to a "minimum" standard. In other words, units may not offer annual leave less than the standard prescribed in these regulations.

Thus, an employee who has worked in a unit continuously for 1-5 years and does not fit into the circumstances mentioned in Article 4 of the new regulations is entitled to five days of paid annual leave provided that the leave regulations of the unit have not changed. An employee who has worked for six years is still entitled to 10 days of annual leave under the original leave regulations of the unit. But if the unit's leave regulations are changed, the employee's leave entitlement will have to follow the unit's new rules. Under the new regulations, statutory national holidays and off days are not included in one¡¦s annual leave. For employees who are entitled to winter and summer vacations according to law, these will be deducted from their annual leave.

Enterprises are now busy coping with the new regulations. Units with an existing level of annual leave higher than the new regulations said they would not cut the days of annual leave for their staff. Other enterprises said that due to the sudden increase in the number of people entitled to annual leave, they may treat old and new employees differently, or "strike a balance" between the old and the new to reduce the impact.

(2) How does "carried forward to the next year" work?

Under the new regulations, annual leave generally may not be carried forward to the next year. But if any leave balance has to be carried forward to the next year for production or work reasons, it may be only be carried forward for one year.

According to experts, this has two levels of meaning. First, annual leave may be taken in one go or several times within the current year. For example, an employee may take a few days off in the first half of the year and take another few days off in the second half of the year. However, one may not "overdraw" on one's leave and take one's annual leave for next year, the year after next or the years ahead. Second, a unit that needs to carry forward its employees' annual leave to the next year may be required to seek approval from the departments concerned. Detailed rules on this will be published at a later date.

The question of how the number of "years" is to be calculated, whether it is calculated by calendar years or an employee's "actual years of service", will be clarified in the implementation rules to be promulgated. As analysed by people in the industry, the majority of work units may adopt the "actual years of service" based on the nature of their business or make agreements in labour contracts signed.

Some enterprises noted that after the promulgation of the new regulations there are bound to be particular periods of time when more employees are inclined to take their annual leave. They hope that employees would make applications in advance according to the nature of their work so management can make arrangements to prevent work from being affected.

(3) What are the standards for compensation and penalty?

In the case where a unit is unable to let its employees take annual leave for work reasons, the unit should pay its employees compensation at 300% the daily wage for each day of annual leave in addition to regular wage and fringe benefits. As for the standards for daily wage, experts suggested using the same method as for the calculation of base figures for overtime pay.

Some enterprises have misgivings about certain points of the new regulations. For example, on the question of "the number of days of unclaimed annual leave", given the lack of clarifications on "employees not taking their entitled annual leave according to the arrangement of the employer", some enterprises are worried that some employees may choose to "claim compensation instead of taking leave", which is an abuse of the original intention of the legislation to protect employees' rights. Instead of giving employees their much-needed rest, this would increase the employer's payroll cost.

In the case where a unit does not give annual leave to its employees and does not give compensation according to regulations, the personnel department or labour security department of the local people's government at or above county level will order it to make corrections within a given time limit. If it refuses to do so, it will be penalised under relevant provisions of the Labour Law, Labour Contract Law and Civil Servants Law. On the specific standards of penalty, experts noted that in spite of calls for the enactment of paid annual leave regulations in previous labour legislations, rules and standards of penalty have never been clearly spelled out. A clear picture of the standards for penalty would only be available after the promulgation of the implementation rules.