ENG
ESP
FR
DE
IT
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 [2012] No.33)” on December 8 and announced the arrangement of national holidays in 2013 as follows:
New Year
- January 1-3 (three days in total)
- January 5 (Saturday) and January 6 (Sunday) are official working days
Spring Festival
- 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
Labor 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
Mid-Autumn Festival
- September 19–21 (three days in total)
- September 22 (Sunday) is an official working day
National Holiday
- 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)
Other stipulations
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.
For further details or to contact the firm, please email china@dezshira.com, visit www.dezshira.com, or download the company brochure.
You can stay up to date with the latest business and investment trends across China by subscribing to The China Advantage, our complimentary update service featuring news, commentary, guides, and multimedia resources.
Related Reading
An Introduction to Doing Business in China
Asia Briefing, in cooperation with its parent firm Dezan Shira & Associates, has just released this 40-page report introducing everything that a foreign investor should be familiar with when establishing and operating a business in China.
Human Resources and Payroll in China (Third Edition)
A firm understanding of China’s laws and regulations related to human resources and payroll management is essential for foreign investors who want to establish or are already running foreign-invested entities in China. This guide aims to satisfy that information demand, while also serving as a valuable tool for local managers and HR professionals who may need to explain complex points of China’s labor policies in English.
Social Insurance and Payroll
In this issue, we take a “back to basics” approach to China’s mandatory benefits. Where, exactly, is that extra 35-40 percent on top of an employee’s salary going? What are social insurance contribution rates, base amounts, and tax exemptions? How does all of this figure into the payroll process? We next look at mandatory benefits as a piece of the larger payroll puzzle, with highlights on two very China-specific pieces: FESCOs and hukou, China’s “domestic passport.”
Mandatory Social Welfare Benefits for Chinese Staff
China Labor Force Issues: Hepatitis B Virus and Infectious Diseases
Update: Foreigner Participation in China’s Social Insurance Scheme
Thank you for the schedule.
Hoping you could clarify one thing:
“on public holidays: 300 percent of basic hourly salary” to my understanding this is not completely correct; the x3 payment is for LEGAL public holiday (forgive me for an incorrect term.)
For example:
“January 1-3 (three days in total)”
I think that only January 1st if triple pay but 2nd and 3rd is double pay as it is switched with a weekend.
Would really appreciate your comments! Thanks again. If I am right would be greatly helpful if you could show clearly which days are in fact x3 and which are x2.
Hi John; This same question crops up every year. The apparent anomaly is due to the Chinese habit of swapping weekdays around with weekends for working days.
Tuesday January 1st – Triple time
Wednesday & Thursday January 2nd & 3rd – Double time.
The reasons being January 1st is a National Holiday so triple time applies. The 2nd and 3rd are borrowed from the weekend so are double time. No I don’t understand that last part either but that is the Chinese logic and what apparently applies.
So now you know.
Merry Christmas!
Chris
I have recently taken on HR responsibility for our Chinese offices. Can you explain how the swapping days work in practice. E.g. I noticed on the official national holiday website that new year counts as a legal national holiday (hence 3x pay) for the other 2 days is a company obliged to offer these? Our company is a service organisation providing services to other APAC regions 7 days a week cover. If employees have choice to take either swap days or weekend days I assume the rate of pay would be 2x as both are considered to be weekend days. Would be interested in hearing how people in service industries manage this holiday schedule.
Yes, as you noted every year the local government will issue a “public holiday list” stipulating the coming year’s holiday arrangement. For most local public holidays, the actual holiday itself normally is about one to three days. However, in order to extend the total leave days that employees may enjoy for one festival, the government will often swap some days on the closest weekend to the public holidays with some days that will normally be working days. This means people may have to shift their weekend with normal working days.
In normal practice, many companies (especially those that have to serve other countries) do not follow the government’s arrangement, so their staff will work as normal (take weekend leave and work on weekdays). Only the worked public holidays will be paid at a rate of 300%. However, for such companies, employers (usually very large ones) sometimes get a local approval from the labor bureau to make sure the “working days” that were specified to be vacation days are allowed to be treated as working days by the company (a kind of “flexible working hour” system). Other companies do not obtain such formal approvals but set an internal policy which the employees follow. This falls into a grey area of the law and interpretation of it may vary across various cities.
If the employees are required to work those weekdays that would normally become vacations, and also required to work the “shifted” weekends as well, the salary for the weekend days shall be made at normal rate of 200% of normal salary.
I have clients going to China in early October. Will the national holiday affect them? Are any sites closed? Any informaiton on this would be most helpful. Thanks!!!
@Betty – If your clients are visiting for tourist purposes then great (although China will also be crowded with Chinese tourists) but otherwise for business purposes I would not recommend they plan a business trip during the October week holiday and suggest you reschedule dates so they do not conflict. – Best regards – Chris