China: Employee was held entitled to prorated 13th month salary though the Employer’s policy indicated otherwise

The employer unilaterally terminated employment relation with Mr. Guo on the ground that he had misconduct.  In addition to disputing the employer’s termination decision, the employee also claimed for 13^th month salary in the dispute resolution process.  Concerning the 13^th month salary, the employer rebutted that, according to the employer’s policy, only employees who remain employed by the time of payment in January will be entitled to 13^th month salary and the employee lost his entitlement due to his exit in August.  The Court heard the dispute and commented that the employer’s policy exempted its legal obligation, excluded the employee’s rights, and thus shall be held as invalid.  The Court further referred to the local regulation in Shenzhen which prescribes that, in the case of employment termination, when the period for monthly, quarterly or yearly salary payment is not due, the salary to pay should be calculated on a prorated basis in view of employees’ actual working period. Therefore, the Court supported the employee’s claim for 13^th month salary. but with a pro-rated amount according to the employee’s total working days accrued in the year of termination.

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