OvertimePayInChina.WhatYaGonnaDo?

ByDanHarrisonFebruary13th,2012
ThefollowingisanemailonwhichIwasccedfromoneofourlawyerstoaclientregardingpayingovertimeto
employeesinChina.IamrunningitherebecausewearesooftenaskedaboutChinasovertimerequirementsand
becausetheyaresodifferentfromthoseintheUnitedStates.Speakingoverlygenerally,overtimeisnotrequired
tobepaidtohighlevelsalariedmanagementintheUnitedStatesandthatgenerallyisnotthecaseinChina,
unlesspriorapprovalfromtheLaborBureauhasbeenobtained.Theeaseofobtainingthisapprovalvarieswildly
acrossChina.
HeresChinageneralsystem:
1.Chinadoesnotrecognizetheconceptofasalariedemployee(withoutovertime)asiscommonintheU.S.for
managementpersonnel.
2.TheonlylegalmethodofpaymentinChinaisbyanhourlywage.Ifanemployeeworksbeyondthe40hour
week,thentheemployeemustbepaidovertime.Iftheemployeeworksbeyondthedaily8hours,theemployee
mustbepaidovertime.Thatisthewaythelawworksandtherearenoexceptions.
3.Thisinflexibleapproachissetupfortheconditionsoflineworkersinalargefactory.Itdoesnotfitwiththe
waythatbusinesseslikeyoursactuallyoperate.
4.TheemployeemanualweprovidedyouaccordswiththestrictrequirementsofChinasovertimelaws.
5.Companiesdealwiththeovertimeissueinvariousways,dependingontheactualconditionsofthecompany.
Themostcommonistohaveaninformalpolicyforadjustment.Thatis,ifanemployeeworkstoomuchinanyday
orweek,theemployeetakestimeoffinsubsequentdaysorweekstocompensate.Thisapproachdoesnotstrictly
complywiththelaw,butIamnotawareofanycompanygettingobjectionsiftheapproachisactuallyfollowed.
However,itisnotsomethingthatshouldbememorializedintheemployeemanualandtherearenoguarantees
thatyouwillnotbefacinganovertimeactionatsomepointdowntheroadforthis.
6.Formanagementpersonnel,thesituationismorecomplex.Itsimplymakesnosensetoexpectthat
managementpersonnelwillbepaidonanhourlybasisinthesamewayasproductionworkers.MostChinese
companiesthereforeexpecttheirmanagementpersonneltoworkonthesamebasisasU.S.stylesalariedworkers.
Eventhoughthisiscommon,itstillexposesthecompanyforaclaimforovertimeifthereisalaterdispute.Again,
thisisnotsomethingthatshouldbeincludedintheemployeemanual.Itshouldinsteadbeworkedoutwiththe
manageronacasebycasebasis.
7.Thereallydifficultissueiswithsalesstaffwhotravelextensivelyandmaintainirregularworkhours.Itisbestto
haveapolicywheretheirworkhoursareadjusteddependingonhowmuchtimetheyhavespentworkinginany
givenweek.Thisisoftendifficulttodo.AnumberofChinesecompaniesmakenoattempttopayovertimeor

makeanyadjustmentforthistypeofworker.Asaresultofthis,thesecompaniesareexposingthemselvesto
claimsforbackovertimeintheeventofadispute.Here,theriskisquitereal.Ihaveseenanumberofcaseswhere
thistypeofworkermakesanovertimeclaiminsituationswherethereisadispute.Sincetheemployment
situationisgettingmoredifficultinChina,disputesarebecomingmorecommon.Youthereforeneedtotake
particularcareontheseissues.
HowdoyouhandleovertimeinChina?

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