According to Article 40 in Labor Contract Law: after the set period of medical care for an illness or non-work-related injury, the employee can engage neither in his original work nor in other work arranged for him by his employer, the employer may terminate an employment contract by giving the employee himself 30 days'prior written notice, or one month’s wage in lieu of notice. And such is one of the legal circumstances that the employer dismisses someone without fault. The employer shall pay the employee severance compensation according to Article 46 in Labor Contract Law. However, whether the employer needs to pay other subsidies separately is not regulated in Labor Contract Law.

However, according to Labor Relations Department’s relevant provisions, if the employer terminates an employment contract with the employee having illness or none-work-related injury, the employers shall pay medical subsidy for employee, specified as follows:

1.Employer terminating labor relationship with the employee within the set period of medical care, should pay medical subsidy:

Article 6 in Economic Compensation Method on Breach and Termination of Contracts(1994, No.481) regulates: “Terminate an employment contract with the employee who can engage neither in his original work nor in other work arranged for him by his employer dye to illness or non-work-related injury, the employer should pay the economic compensation according to employee’s working years, each year is equal to one month’s wages, meanwhile, the employer should also pay the medical subsidy no less than six months'wages.” Medical subsidy for serious illness and fatal illness should also increase, which is no less than 50 percents of the medical subsidy for the serious illness, and no less than 100 percents for the fatal illness.

Article 35 in Opinions on Problems Involved in Labor Department’s Implementing Labor Law (1996) regulates: After long period of medical care, the capable employee can continue to perform the labor contract, while after the set period of medical care for an illness or non-work-related injury, the employee can engage neither in his original work nor in other work arranged for him by his employer, should be verified the degree of physical disability by labor ability expertise commission in accordance with occupational injury appraisal standard. Once identified as 1 to 4 degree, the employee must terminate the labor contract due to illness or non-work-related injury, and enjoy corresponding retired treatment; the employer can terminate labor contract to the injury employee identified as 5 to 10 degree, and pay economic compensation and medical subsidy according to relevant provisions.

These two provisions seem to be inconsistent: The former regulates the employer should pay the prescribed medical subsidy, while the latter refers to the labor ability appraisal, once identified as 1 to 4 degree, one must terminate the labor contract due to illness or non-work-related injury, and enjoy corresponding retired treatment. The author believes that the provisions in 1996 are meant to strengthen the protection on sick or injured laborers, for the retired and resigned workers step into the social security system and can obtain monthly pension or subsidies. Moreover, from the principle that the new method is better than the old one, it can be assumed that the employee identified as 1 to 4 degree via the labor ability appraisal should deal with retirement, and the employer does not need to pay medical subsidy.

2.Employer terminating labor relationship with the ill or none- work-related injured employee after labor contract’s effective date, should pay medical subsidy:

Article 22 in Labor department’s Notifications about Problems involved in the labor contract system (1996, No.354) stipulates: Employer shall pay the medical subsidy no less than six months'wages if terminates labor relationship with the ill or none- work-related injured employee after labor contract’s effective date; as for the serious illness or fatal illness, the employer should increase the medical subsidy.

The notification from general office of labor department on problems involved in labor department’s 354 Files (1997, No.18) refers the article 22 (Employer shall pay the medical subsidy no less than six months'wages if terminates labor relationship with the ill or none- work-related injured employee after labor contract’s effective date.) to the employee whose labor contract or period of medical care comes to the end, to the injury employee identified as 5 to 10 degree, the employer should pay the medial subsidy no less than 6 months'wages, identified as 1 to 4 degree via the labor ability appraisal, one has to deal with retirement and enjoy the retied treatment.

The above regulations explicitly describe the circumstances when employer terminates labor relationship with the ill or none- work-related injured employee after labor contract’s effective date and pay medical subsidy, so hereby the author will not describe unnecessary details.

However, it should be pointed out that no matter the medical period or the contract period comes to the end, the above regulations have to face an embarrassing sentiment in implementation process: the employee identified as 1 to 4 degree injury (that is losing labor ability completely) does not accord with retire or resign related policies and rules,  and so can’t deal with retirement. So, how to protect the rights and interests of laborer on such situation? So far, Shanghai has made local regulations, which the employer shall extent the medical period appointed by the employer and employee, and the total medical period shall not less than 34 months. Beijing has no such regulations currently, but according to Article 67 in Opinions on Problems involved in Labor department’s implementing Labor Law (1996): “For the employees with special disease (such as cancer, mental disorder, paralysis, etc.), who cannot be cured within 24 months, after the approval of enterprise and local labor department, the medical period can be lengthened.” So the ill employees can negotiate with the employer to extent the medical period.