How paid sick leave should be calculated?

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When our employees need to take sick leave, how should we handle it? There are some key points that we do need to keep in mind.

Such as can paid sickness days be accumulated, how sick leave entitlement should be calculated and how to pay this off? Workstem will share the solutions to you in this article.

Under what circumstances does an employee entitled to the sickness allowance?

According to the labour legislation, An employee employed under a continuous contract is entitled to sickness allowance if:

(1) the sick leave taken is not less than four consecutive days (unless for any day off taken by a female employee for her pregnancy check-ups, post confinement medical treatment or miscarriage, any such day on which she is absent shall be counted as a 

sickness day and, subject to the following conditions, be paid sickness allowance);

(2) the sick leave is supported by an appropriate medical certificate; and

(3) the employee has accumulated sufficient number of paid sickness days (Note: Paid sickness days can be accumulated up to a maximum of 120 days. It is accumulated at the rate of 2 paid sickness days for each completed month of employment under a continuous contract during the first 12 months of employment, and 4 paid sickness days per month thereafter.)

However, the employee is not entitled to sickness allowance if:

(1) the employee, without reasonable excuse, refuses treatment by a company doctor of a medical scheme that is recognised by the Director of Health or disregards the advice of that doctor;

(2) the sickness day falls on a statutory holiday on which the employee is entitled to holiday pay; or

(3) compensation is payable under the Employees’ Compensation Ordinance.

In short, sickness allowance is a sum equivalent to four-fifths of the normal wages that employees would have earned if they had worked and employees are entitled to it when the sick leave taken is equal or longer than four consecutive days with the appropriate medical certificate.

Two categories of paid sickness day

Paid sickness days are divided into two categories – paid sickness days can first be accumulated up to 36 days in Category 1 and then 84 days in Category 2.

CategoryAccumulated paid sickness daysCondition
Category 136a medical certificate issued by a registered medical practitioner, registered Chinese medicine practitioner or a registered dentist is required.
Category 284-When the sickness days taken exceeds the number of paid sickness days remaining in Category 1, any further sickness day(s) taken will enter in Category 2.-if so required by the employer, a medical certificate* issued by a registered medical practitioner, registered Chinese medicine practitioner or a registered dentist attending the employee as an out-patient or in-patient in a hospital should be produced. Upon the employer’s request, a brief record of the investigation carried out and the treatment prescribed by the issuer of the medical certificate should also be produced.

Sickness days fall on annual leave or statutory holiday

When employees apply for paid sick leaves that may overlap their annual leaves or statutory holidays, employers should determine different situations accordingly.

-If the sickness days fall on an employee’s rest day, that day is counted as the sickness day and the employee does not need to grant another rest day afterwards.

-If the sickness days fall on an employee’s statutory holiday(include alternative holiday and the substituted holiday), the day is counted as the sickness day and the employee does not need to grant another statutory holiday. For those employees having been employed under a continuous contract for not less than 3 months are entitled to pay on statutory holidays, but the employee does not need to pay the sickness allowance for that day meanwhile.

-If the first day of sickness leave days is not later than the first day of the statutory holiday, all statutory holidays in the paid sick leave period are counted as sickness days and employers need to repay the relevant holiday allowance; or all sickness days will be counted as statutory holidays and employers do not need to repay the sickness allowance.

Can an employer dismiss an employee who is on paid sick leave?

Just like what we already discussed above, employees are entitled to the sickness allowance when the leave days are no less than 4 consecutive days with the medical certificate. Otherwise, the employee has the right to not pay the relevant basic salary because of the absence, attendance bonus, etc.

For those companies which are willing to pay for employees’ sickness allowance even if they do not meet the rules that labour policy set, it is indeed an extra benefit for staff as employees could only apply for no pay sick leaves in this case.

On the other hand, an employer is prohibited from terminating the contract of employment of an employee on his paid sickness day, except in cases of summary dismissal due to the employee’s serious misconduct. An employer who contravenes the above provision is liable to prosecution and, upon conviction, to a fine of $100,000. Besides, the employer is required to pay the following sum of money to the dismissed employee within 7 days after the day of termination:

(1) payment in lieu of notice;

(2) a further sum equivalent to seven days’ wages as compensation; and

(3) any sickness allowance to which the employee is entitled.

Classic Cases

Full paid sick leave:

Sarah is a marketing manager with a monthly salary of $10000. She joined the company on January 1st, 2021 and applied for three days of full paid sick leave from 5th July 2021 to 7th July 2021.

Three days of full paid sickness allowance: $10000/24(the number of working days)*3=$1250

Paid sick leave:

The employee had served for 12 months or more:

Blois is a sales manager with a monthly salary of $10000 and applied for 5 days of 4 consecutive paid sick leave: from 5th July 2021 to 7th July 2021. His total earnings for the last 12 months is $13000 and he also had applied for three days of sick leave before, the relevant sickness allowance is $1800. The sickness allowance for Blois in July is calculated as below.

Average daily wage in past 12 months($130000-$1800) / (365-3)=354
Average daily wage in July$10000/31=323
Sickness allowance for 5 days in July354*5*0.8=1416

In most cases, the employee should compare the ADW in the past 12 months and the ADW in the current month to choose the greater value when calculating.

The employee had served for less than 12 months:

Curry is in the same position like we mentioned in aboved examples with a monthly salary of $10000. He joined the company on January 1st and applied for 4 days of 4/5 paid sick leave starting from June 6th to Jun 9th. 

According to the labour legislation, The daily rate of sickness allowance is a sum equivalent to four-fifths of the average daily wages earned by an employee in the 12-month period

preceding the following specified dates. If an employee is employed for less than 12 months, the calculation shall be based on the shorter period.

4 days of 4/5 paid sickness allowance is calculated as : $10000/31*4*0.8=$1032

Paid sickness daySpecified date
1 day​​The sickness day
More than 1 consecutivedayThe first sickness day

Managing Leave Anywhere At Any Time With Workstem

No paid sick leave, 4 consecutive paid sick leave and full paid sick leave are different. Employers and HRs always need to keep in mind how to determine what type of sick leave the employee is entitled to, and how that is calculated in diverse scenarios.

Three types of sick leave employees may apply:

-No paid sick leave

-Paid sick leave

-Full paid sick leave

Notice: Considering employees may be unclear about the differences between these types of sick leave, Workstem recommends employers or HRs to set sick leave as applicable only. After staff have applied, you may manually adjust the relevant leave type based on the actual situations.

Scenario 1:

Laura is an employee under a continuous contract who had also served for 12 months, she applied for 20 days of sick leave on Workstem One app and uploaded the appropriate medical certificate as well. After the employer has approved the leave either via web or mobile app, the system will automatically do the paid sick leave calculation.

One month later, Laura felt uncomfortable and applied for 2 days of sick leave directly on the mobile app, as the sick leave taken is not less than four consecutive days so the employer does not need to pay for her time off. When adjusting the types of paid time off, it is no paid sick leave but not the paid sick leave.

Scenario 2:

Tom is an employee that is not under a continuous contract. He had applied for 5 days of sick leave because of getting sick, however, he could only take days off with no sickness allowance after the employer had done the approval. But if the employee is willing to pay the sickness allowance for extra benefit even if he does not meet the requirement set by the labour department, he or she could then adjust the type of paid time off as the paid sick leave.

Scenario 3:

If company B would like to give employees 2 days of full paid sick leave per month, the employee or HR could set the relevant leave policy in the system and it will automatically calculate the correct amount of leaves for all your employees.

Everything is harder than it looks. Before the employee takes sickness days there are so many things employers should consider, including how to know if employees are entitled to paid sickness allowance and how to calculate the sick leave salary when that overlaps the statutory holiday. Even if the employer would like to give staff full paid leave as benefits, it is always difficult when dealing with sick leave pay calculation.

Workstem provides a simple and fast approach for your employees and managers to administer their paid time off. Our streamlined automated system allows employees to apply their leave without having to go to HR. Click the link below to enjoy 14-days free trial now!

(The content and information in this article are for reference only. The accuracy and reliability of the information are subject to the latest government regulations.  If you want to reprint the article or content, please contact us first or attach a link to this article, and indicate the source of reprint.)
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