Our company frequently has a need for employees to work overtime. I would like to know how overtime pay is calculated? Can an employer require employees to work overtime, and what is the maximum permissible overtime working time?
Answer:
Pursuant to Article 98 of the 2019 Labor Code, employees working overtime are entitled to overtime pay calculated based on the applicable wage unit or the actual salary paid for the work being performed, at the following minimum rates:
· At least 150% for overtime work performed on normal working days
· At least 200% for overtime work performed on weekly days off;
· At least 300% for overtime work performed on public holidays, Tet holidays, or paid leave days, excluding the salary for the public holiday, Tet holiday, or paid leave day applicable to employees receiving daily wages.
For employees working at night, in addition to the salary for the normal work, the employees are entitled to an additional payment of at least 30% of the wage calculated based on the wage unit or the actual salary paid for the work performed during a normal working day.
In cases where employees work overtime at night, in addition to the above-mentioned payments, the employees are also entitled to an additional 20% of the wage calculated based on the wage unit or the salary for the work performed during the daytime of a normal working day, weekly day off, or public holiday or Tet holiday.
Regarding the conditions for overtime work, pursuant to Article 107 of the 2019 Labor Code, an employer may only require employees to work overtime when all conditions prescribed by law are satisfied, including obtaining the employee’s consent.
At the same time, the enterprise must ensure compliance with the statutory limits on overtime working hours. In principle, overtime working hours must not exceed 50% of the normal working hours in a day. Where the enterprise applies normal working hours on a weekly basis, the total normal working hours and overtime working hours must not exceed 12 hours per day and 40 hours per month.
Regarding the annual limit, overtime working hours generally must not exceed 200 hours per year. In certain industries, occupations, jobs, or circumstances prescribed by law, the enterprise may arrange overtime work of up to 300 hours per year, such as the production or processing for export of certain textile, garment, leather, footwear, electrical and electronic products; electricity production and supply, telecommunications, oil refining; or cases where urgent work that cannot be postponed must be addressed due to seasonal factors, technical incidents, natural disasters, fires, and other cases as prescribed by law.
Where overtime work falls within the categories permitted to reach the maximum of 300 hours per year, the employer is also required to provide written notification to the specialized labor authority under the provincial-level People’s Committee in accordance with the regulations.
Conclusion
An enterprise may require employees to work overtime when all conditions prescribed by the Labor Code are satisfied, particularly obtaining the employee’s consent and ensuring compliance with the statutory limits on overtime working hours. At the same time, the enterprise must pay overtime wages at the minimum rates of 150%, 200%, or 300%, depending on when the overtime work is performed, as well as the additional payments applicable to employees working at night.
Failure to comply with regulations on overtime pay and working hours may give rise to legal risks and adversely affect employees’ rights and benefits.
If your enterprise requires advice on overtime pay, development of overtime working regulations, or a review of compliance with regulations on working hours and rest periods, please contact SB Law for timely and appropriate support from our team of lawyers and legal experts.
