Shanghai Sick Leave Pay has Changed — Here’s What our HR Leaders Need to Do

If you are responsible for a HR in Shanghai, this change is worth your attention. Since 15 August 2026, Shanghai’s long-standing regime for sick leave payment is no longer in force, and there is no direct replacement. Under the old rules, employers paid between 60% and 100% of salary, depending on an employee’s years of service. 

So, what do you do now? Start with two checks: 

1. What do the national rules require? 
2. What has your company already promised in its policies and contracts?

Remember the old rules? Here’s the quick recap:

Here is a quick reminder of how the old system worked: the longer an employee has worked continuously for your company, the higher the percentage of salary they received during sick leave.

There was a cap as well. If the calculated benefit came out higher than Shanghai’s average monthly salary for the previous year, you could use that average instead. To put a number on it, Shanghai’s 2025 average monthly salary is RMB 12,577.

So, what rules should you follow now?

The Shanghai Measures for Enterprise Wage Payment, effective from 1 August 2026, continues to govern the calculation base for leave pay, which does not prescribe a replacement set of sick leave payment percentages as before. And accordingly, Shanghai employees are now subject to sick leave pay obligations determined by, and subject to, (i) national statutory requirements and (ii) the company’s own internal rules and contractual commitments.

What is the minimum you need to pay?

At least 80% of the Shanghai monthly minimum wage, currently RMB 2,192 per month. If your policies or contracts promise more, however, you will still need to honor that higher benefit.

A quick word of caution:

The old rules may have expired, but that does not mean employers can simply choose any payment arrangement. You still need to meet the mandatory requirements. Before making a change, compare the proposed calculation and payment standard with your employment contracts, collective contracts, company policies and established practice. If your offer letters, contracts or employee handbooks refer to the former tiered rates, those promises may still bind you.

So, where does that leave you? 

You have more room to review how your company handles sick leave pay, but there is also more uncertainty when your documents are silent or inconsistent. And do not count on the change automatically reducing payroll or termination-related liabilities. Before you adjust anything, look at the legal, financial and employee relations impact in each case.

Not sure where to begin? These two steps will help you get started:

1. Check what you have already promised
   Review all documents and established practices governing sick leave pay, including employment contracts, collective contracts, employee handbooks, standalone leave policies, payroll rules, employment offer documents and established practices. Identify provisions that explicitly incorporate the former service-tenure-based percentage framework, provisions that grant more favorable benefits than the statutory baseline, and provisions that are silent on the calculation method. Valid existing commitments shall continue to be enforced unless and until they are lawfully amended; the expiry of the local regulatory document does not automatically invalidate contractual or policy-based entitlements already granted to employees.
2. Make sure you follow the right process
   Where a proposed adjustment involves remuneration or other matters that directly impact employee interests, employers must comply with the consultation procedures required by applicable law. Employers should discuss the proposed adjustment with the employee congress or all employees, consult with the trade union or employee representatives, formally enact and communicate the revised rules, retain written evidence of each procedural step, and allow a reasonable lead time before the new rules take effect. Individual employee consent may also be required if the adjustment alters existing contractual terms or vested entitlements.

Whether amending internal rules or revising employment contract terms, drastic overhauls are not recommended. Excessive modifications may erode employee cohesion and undermine corporate employee welfare initiatives. It is recommended that enterprises carefully evaluate how to balance positive employee experience with managerial flexibility, while adhering to the statutory baseline established by relevant regulatory provisions.