When the probation period meets the medical treatment period

The facts

Ms Zhu joined a human resources company on 9 April 2018 under a two-year employment contract with a salary of RMB 5,000 a month, providing for a probation period from 9 April to 8 June 2018 at RMB 4,000 a month. On 7 May 2018 she underwent surgery on her right foot and applied for a month's sick leave, submitting medical evidence covering the period to 6 June 2018. She returned to work on 7 June, and the company agreed with her to extend the probation period to 8 July 2018, signing a written supplementary agreement annexed to the contract that day. In October 2018 she applied for arbitration, claiming RMB 5,000 in compensation for an unlawful agreement on the probation period.

The parties' positions

Ms Zhu argues that the contract is for two years, and that under the Labor Contract Law the probation period may not exceed two months, whereas the company extended hers to three, plainly contrary to law, so compensation should be paid.

The company's position is that Ms Zhu took a full month of sick leave during probation and was not at work, so the company could not assess her and the probation was in effect not performed. When she returned, the parties agreed to extend the probation by one month, precisely filling the month of sick leave, so the company did nothing unlawful and does not agree to pay compensation.

The issues

First, can a period of sick leave during probation be left out of the probation period?

Second, may employer and employee extend the probation period by agreement?

The award

The arbitration commission held that the agreement extending the probation period was void for breach of the mandatory provision in Article 19(2) of the Labor Contract Law, under which the same employer may agree only one probation period with the same employee, and that a probation period of three months also exceeded the maximum in Article 19(1). Ms Zhu's contention that the company had unlawfully agreed a probation period with her was therefore well founded, and her claim for compensation for the period actually served beyond the statutory maximum was upheld.

Commentary

In its reply to a request for instructions on questions of labor employment management (Lao Ban Fa [1996] No. 5) the former General Office of the Ministry of Labor defined the probation period as a period of assessment of not more than six months, agreed after the employment relationship is established, during which employer and employee get to know and choose each other. The probation period cannot, however, be understood literally and simply as a trial: an enterprise cannot decide to end the employment on the strength of its own subjective impression of the trial. The Labor Contract Law regulates the probation period in close detail, with mandatory rules on its length, the number of times it may be agreed, the minimum wage and the conditions for termination. Article 21, for example, excludes during probation the employer's right to terminate without fault under Article 40(3) and its right to make economic redundancies under Article 41, so that an employee on probation is in fact better protected than one who has been confirmed in post. Article 39(1) does give a right to terminate for fault during probation, but in practice many enterprises neglect or misunderstand the setting of recruitment conditions and simply rely on that provision when dismissing, with the result that the termination is unlawful.

Article 19 of the Labor Contract Law lays down the iron rules on the maximum length of the probation period and on the single occasion on which it may be agreed, thereby ruling out a further probation period on renewal of the contract or on a change of post, and ruling out a fresh agreement between the parties to extend an existing probation period. Whether the employee's performance during probation is unsatisfactory or some other objective circumstance exists, agreeing a longer probation period is plainly unlawful, however reasonable the reason for the extension appears and even if the employee agrees.

The provisions on probation are relatively strict on employers because they are intended to restrain an enterprise's autonomous power to manage its workforce and to balance the unequal strength of the parties, so that the employee's right to employment is not excessively suppressed or infringed.

The medical treatment period is the period during which an employee who is ill or injured otherwise than at work stops work for treatment and rest, and during which the employer may not terminate the contract on that account. The Provisions on the Standards for the Medical Treatment Period of Employees of This Municipality who Fall Ill or Are Injured Otherwise than at Work during the Performance of an Employment Contract provide that an employee is entitled to a medical treatment period of three months in the first year of employment with the employer. There is therefore no conflict in law between the probation period and the medical treatment period: the sick leave to which an employee is entitled during the medical treatment period, and the restriction on the exercise of certain statutory rights of termination by the enterprise, are unaffected by whether the employee is on probation.

Here the company's reason for wishing to extend the probation period was entirely reasonable, since Ms Zhu was on sick leave for a whole month, during which the company could not assess her attitude and ability or judge whether she met the recruitment conditions. Extending the probation by a month, however, produced two unlawful facts at once: two probation periods were agreed, and the probation period exceeded the statutory maximum. Under Articles 19 and 83 of the Labor Contract Law the arbitration commission therefore upheld her claim.

What the case shows

For an enterprise the probation period is not as useful as it is imagined to be. What an enterprise most wants during probation is to assess whether the employee's performance, or the contribution made in the post, matches the salary paid and whether the employee meets its expectations. But an employee who reaches the probation stage has generally already satisfied the objective and universally applicable recruitment conditions set for the post, and fixed recruitment conditions are plainly inadequate for a detailed, dynamic and comprehensive assessment of performance during probation. It is therefore more important and more necessary to agree recruitment conditions that are closely targeted, clear, intuitive and easy to apply. Seeking to add to or extend the probation period does more harm than good and is not worth the candle.