Plus a look at how overtime is calculated in China
Dec. 11 – China’s General Office of the State Council released the “Circular on the Arrangement of Certain Holidays in 2013 (guobanfamingdian  No.33)” on December 8 and announced the arrangement of national holidays in 2013 as follows:
- January 1-3 (three days in total)
- January 5 (Saturday) and January 6 (Sunday) are official working days
- February 9-15 (seven days in total)
- February 16 (Saturday) and February 17 (Sunday) are official working days
Tomb Sweeping Day
- April 4-6 (three days in total)
- April 7 (Sunday) is an official working day
- April 29 – May 1 (three days in total)
- April 27 (Saturday) and April 28 (Sunday) are official working days
Dragon Boat Festival
- June 10-12 (three days in total)
- June 8 (Saturday) and June 9 (Sunday) are official working days
- September 19–21 (three days in total)
- September 22 (Sunday) is an official working day
- October 1-7 (seven days in total)
- September 29 (Sunday) and October 12 (Saturday) are official working days
Calculation of Overtime in China
Overtime can be expensive for employers. In China, employees are grouped into three categories working under different systems:
- The standard work hour system
- The comprehensive work hour system
- The non-fixed work hour system
The standard work hour system requires that an employee’s normal working day should not exceed eight hours, and that the normal working week not exceed 40 hours. Each employee should be guaranteed at least one rest day. Most white-collar workers in China now operate under a five-day working week, although some domestic companies still utilize a six-day working week model.
The comprehensive work hour system does not refer to one week as the key factor in regulating working hours. Instead it takes a set period (usually a month, but not necessarily) as the base to calculate the number of working hours. Although the distribution of hours worked during this period may be quite irregular, the average number of working hours per day and per week should roughly correspond to the levels set out in the standard work hour system. Please note that before a company can implement this system it must submit its plan to the local labor bureau and receive approval. This system is normally used for blue-collar workers or other workers that require irregular shifts.
Under the non-fixed work-hour system employees do not generally receive overtime payments because measurement of the time spent working is considered to be impractical. A company implementing this system for some of their employees should receive prior approval from the local labor bureau.
Let’s take a look at how overtime is calculated for the two types of workers eligible to receive it:
Overtime under the standard work hour system
Overtime for office workers with set working hours each weekday is calculated as follows:
- Extra hours worked on weekdays: 150 percent of basic hourly salary
- Hours worked on weekends: 200 percent of basic hourly salary
- Hours worked on public holidays: 300 percent of basic hourly salary
The basic hourly salary is calculated by taking the basic monthly pay of the employee and dividing it by 174 (average number of working hours in the month).
These are the mandatory minimum percentages paid to employees for the overtime they work, although some companies offer their employees higher rates than the statutory minimums.
Overtime under the comprehensive work hour system
Overtime for shift workers is calculated as follows:
- Extra hours worked outside of normal shift: 150 percent of basic salary
- Extra hours worked on public holidays: 300 percent of basic hourly salary (this higher rate applies even if the standard shift for the worker is scheduled on a public holiday)
There are also some restrictions on the amount of overtime an employer may ask an employee to do. For example, an employee may only work the following amount of overtime:
- A maximum of three hours in any one weekday
- A maximum of 36 hours in any one month
Assuming a company stipulates an eight-hour work day, then in a month a worker shall work 174 hours on average. Adding this maximum 36 hour period of overtime means that (for an average month) an employer cannot legally require an employee to work for more than 210 hours during that month.
Dezan Shira & Associates is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in emerging Asia.
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