It’s a well known fact that employees in China often find themselves subjected to long hours of unpaid overtime. But what do China’s labor laws stipulate when it comes to working hours and overtime, and what are you rights as a worker?
By the letter of China’s labor laws, standard working hours should be limited to eight hours a day and 44 hours a week. Any overtime performed on top of these hours should be paid at 150% of the base salary if the overtime was worked on a normal day, 200% of the base salary if on a rest day (such as Saturday or Sunday) and a whopping 300% if on a national holiday.
Officially, workers cannot be compensated for overtime by having time off subsequently. Under strict interpretation of the rules, if an employee works a 11 hour day, they should get paid for 8 hours at the base rate and 3 hours at the official overtime rates listed above. In addition, overtime should not exceed three hours a day or 36 hours per month.
One Country, Three Systems
However, Chinese labor laws recognize the fact that the Standard Working Hour System of eight hours a day and 44 hours a week is not practical for every job and industry. There are therefore two other systems employers in China can use.
The Flexible Working Hour System - which is only applied to certain positions, such as sales executives, senior management and drivers - allows employers and employees to work together to design a system where hours are calculated on a weekly or monthly basis. However, the final number of hours worked must be as close to a 44-hour working week as possible. Paying a worker a set salary by month regardless of the hours worked is not permitted. With this method an employer is not required to pay overtime, but the employer must ensure the workers have “sufficient time off” to ensure their well being.
Another method is the Comprehensive Working Hour System, again only applicable to certain industries, including transportation, construction and tourism. Under this system, an employee’s working hours are calculated periodically, such as by the week, month, quarter or year. However, again, the average daily and weekly working hours should be more of less the same as the standard system. Under this method employers can compel workers to toil for any number of hours each day at no overtime pay as long as then total number of hours doesn’t exceed those permitted within the cycle.
In principle, an employer wanting to adopt either the Flexible Working Hour System or the Comprehensive Working Hour System must obtain approval from the local labor authority.
In reality, a lot of companies in China simply ignore the labor laws and make up their own internal systems. It's very common, for example, for Chinese companies to have employees redeem their overtime hours by coming in late or finishing early on other days rather than paying them the overtime rate.
By law, the CEO of a factory and a line worker must both be paid on a rigid hourly system. As this is simply not practical, most companies in China will adopt a system of its own, often not entirely in keeping with the law.
In the worse cases, particularly in less formal industries such as construction and service, employees can find themselves forced into excessive overtime with no compensation at all. Some workers without a formal employment contract may find they’re not paid until a project is completed or even until the Lunar New Year when Chinese people traditionally like to settle their accounts.
When companies ignore the labor laws, as is quite common in China, they leave themselves at risk of disgruntled employees making claims for overtime pay after they have either resigned or been terminated. Companies not obeying the rules may be charged with unpaid overtime hours, plus interest, plus penalties. The labor authorities in China tend to come down quite hard on offenders when presented with a case, particularly if the accused company is foreign owned.
Your Cards as an Employee
Before signing a work contract in China you should be sure to nail down how the company calculates working hours and overtime. Name-dropping some of the systems above will show an employer you known your stuff and won’t be taken advantage of. If your potential employer cites a system outside of the rules, such as getting time off instead of overtime pay, it’s up to you whether or not you agree to this. As such an agreement won’t be in your work contract and is not technically legal, you may find the reality is different once you get to work. You will, however, be entitled to bring a case against your employer if you ever felt the need to. If you think such a move could be in your future, be sure to record all the unpaid overtime hours you work. Ultimately, though, it’s best to insist on a legal system in the first place.
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Keywords: overtime rules China China labor laws
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