Answer: So-called time-off in lieu offsetting overtime hours is that an employee takes alternative leave after overtime work and consequently the employer do not have to pay overtime wages for those hours. Obviously, it is one of the preconditions for accurately calculating the overtime wages of employees to distinguish different types of overtime and find out whether the time-off in lieu can offset the number of overtime hours. Whether an employee’s time-off in lieu can be used to offset overtime hours depends on what kind of overtime hours the employee’s time-off in lieu is used to offset.
First of all, employees’ time-off in lieu may be offset number of overtime hours in weekend days (that is, weekends). Moreover, employment law requires employers to prioritize time-off in lieu for overtime work on employees’ weekend days, and only if it is impossible, the employer may choose to pay overtime wages. Secondly, overtime hours in public holidays is not allowed to be offset by time-off in lieu, that is to say, employees must pay overtime wages for public holidays overtime hours regardless of whether they have time-off in lieu or not.1The case of labor dispute between China Southern Fund Management Co., Ltd. and XIEXUEJUN, Shenzhen Intermediate People’s Court of Guangdong Province issued the Civil Judgment (2015) S.Z.F.L.Z.Z. No.5199. In this case, the employee¡¯s days of time-off in lieu exceeded the number of days of overtime work on weekend days, but the court still refused to use the surplus days of time-off in lieu to offset the days of public holidays overtime.
Finally, as to whether overtime hours in weekdays can be settled by time-off in lieu, the prevailing practice of courts around the country appears to recognize the effectiveness of the leave in lieu.2Zhejiang Sunflower Solar Energy Technology Co., Ltd., Zhang Feng Labor Dispute Second Instance Civil Judgment Zhejiang Shaoxing Intermediate People’s Court Civil Judgment (2019) Zhe 06 Min Zhong No.2281. In the case, the court recognized the company’s rules that overtime on weekdays shall not be paid overtime wages but can be taken time-off in lieu.¡± Zhang Weiwei and Halliburton (China) Energy Services Co., Ltd., Civil Judgment of the Second Intermediate People’s Court of Tianjin, Civil Judgment of the Second Intermediate People’s Court of Tianjin (2018) No.3872. ¡°The Court of First Instance holds that overtime on public holidays is different from overtime on weekdays and weekend days, and that it contains certain humanistic and ethical needs. Therefore, overtime on public holidays is not allowed to take time-off in lieu.¡±However, some courts around the county, such as the Shenzhen Intermediate People’s Court, hold the opposite opinion. For example, in the case of Zeng Yingyu before the Shenzhen Intermediate People’s Court in 2020, the court emphasized that the law does not allow time-off in lieu for overtime hours in weekdays and public holidays, so overtime wages must be calculated according to the actual number of overtime hours in weekdays and public holidays without deduction of time-off in lieu if any.3 Shenzhen Kedun Technology Co., Ltd. and Zeng Yingyu’s Civil Judgment of Second Instance of Labor Dispute Civil Judgment of Shenzhen Intermediate People’s Court of Guangdong Province (2020) Yue 03 Min Zhong 27737. ¡°According to the provisions of Article 44 of the Labor Law of the People’s Republic of China, overtime on weekend days can be taken time-off in lieu. This law does not stipulate that overtime work on weekdays and on public holidays can be taken time-off in lieu. Since Kedun Company confirmed Zeng Yingyu’s weekdays¡¯ overtime hours, this court confirms that the court of first instance ruling that Kedun Company should pay Zeng Yingyu the weekday¡¯s overtime wages of RMB 2,172.41 has factual and legal basis.¡±
In principle, employers have the right to arrange the time-off in lieu for employees, but they shall reasonably notify the employee in advance,4He Chengsheng and Oupai Home Furnishing Group Co., Ltd. Civil Judgment of the First Instance of Labor Dispute Civil Judgment of the People’s Court of Baiyun District, Guangzhou City, Guangdong Province (2023) Yue 0111 Min Chu No.686. ¡°Although Oupai Company has the right to arrange overtime and time-off in lieu, it shall express its intention and notify He Chengsheng of such arrangement.¡±and shall not cause unreasonable inconvenience to the life and work of the employees.
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Mr. Dong Wang has been in practice for over 20 years, specializing in business law, including employment law, commercial law, company law, and intellectual property law. Mr. Wang has earned respect and trust from his clients due to his professionalism, fidielty, and kindness.
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- 1The case of labor dispute between China Southern Fund Management Co., Ltd. and XIEXUEJUN, Shenzhen Intermediate People’s Court of Guangdong Province issued the Civil Judgment (2015) S.Z.F.L.Z.Z. No.5199. In this case, the employee¡¯s days of time-off in lieu exceeded the number of days of overtime work on weekend days, but the court still refused to use the surplus days of time-off in lieu to offset the days of public holidays overtime.
- 2Zhejiang Sunflower Solar Energy Technology Co., Ltd., Zhang Feng Labor Dispute Second Instance Civil Judgment Zhejiang Shaoxing Intermediate People’s Court Civil Judgment (2019) Zhe 06 Min Zhong No.2281. In the case, the court recognized the company’s rules that overtime on weekdays shall not be paid overtime wages but can be taken time-off in lieu.¡± Zhang Weiwei and Halliburton (China) Energy Services Co., Ltd., Civil Judgment of the Second Intermediate People’s Court of Tianjin, Civil Judgment of the Second Intermediate People’s Court of Tianjin (2018) No.3872. ¡°The Court of First Instance holds that overtime on public holidays is different from overtime on weekdays and weekend days, and that it contains certain humanistic and ethical needs. Therefore, overtime on public holidays is not allowed to take time-off in lieu.¡±
- 3Shenzhen Kedun Technology Co., Ltd. and Zeng Yingyu’s Civil Judgment of Second Instance of Labor Dispute Civil Judgment of Shenzhen Intermediate People’s Court of Guangdong Province (2020) Yue 03 Min Zhong 27737. ¡°According to the provisions of Article 44 of the Labor Law of the People’s Republic of China, overtime on weekend days can be taken time-off in lieu. This law does not stipulate that overtime work on weekdays and on public holidays can be taken time-off in lieu. Since Kedun Company confirmed Zeng Yingyu’s weekdays¡¯ overtime hours, this court confirms that the court of first instance ruling that Kedun Company should pay Zeng Yingyu the weekday¡¯s overtime wages of RMB 2,172.41 has factual and legal basis.¡±
- 4He Chengsheng and Oupai Home Furnishing Group Co., Ltd. Civil Judgment of the First Instance of Labor Dispute Civil Judgment of the People’s Court of Baiyun District, Guangzhou City, Guangdong Province (2023) Yue 0111 Min Chu No.686. ¡°Although Oupai Company has the right to arrange overtime and time-off in lieu, it shall express its intention and notify He Chengsheng of such arrangement.¡±