49.I am an HR manager. How do I calculate overtime pay for employees?

Answer: What introduce below is the overtime wage computation of standard hour system, include permanent employment contracts, fixed-term contracts, labor dispatch, and assignment contract.

There are three kinds of overtime wages for employees, namely, overtime wages on weekdays, weekend days, and public holidays. These three types of overtime pay depends on the overtime hours of three types done by the employee, whether the employee has taken time-off in lieu, and the different statutory overtime pay rates.

The number of hours you can use to calculate the employee’s overtime pay should first consider whether there is time-off in lieu. Please refer to Can employees’ time-off in lieu be used to offset overtime hours?

Having offset overtime hours by time-off in lieu, the employer needs to calculate net overtime hours of each type of overtime. The hourly rate for weekday overtime hours is 150% of the employee¡¯s ordinary hourly wage; overtime hours in weekend days, 200%; overtime hours in public holidays, 300%.

For example, an employee with a normal monthly wage of RMB 5,000 had, in this month, 30 hours of overtime in weekdays, 8 hours of overtime in weekends, and 16 hours of overtime in public holidays. The company should endeavour to arrange for the employee to take time-off in lieu for the 8 hours in weekends, so that only 30 hours of overtime in weekends and 16 hours of overtime in public holidays need to be paid for. However, if the time-off in lieu is not arranged, the overtime wages of the employee is RMB 3,132 (5000/ (21.75 * 8) * (30 * 150% + 8 * 200% + 16 * 300%)). Note that 21.75 represents the annual average number of working days per month in China, and thus, 174 hours (21.75*8) is the annual average number of working hours per month in China.

The 150%, 200%, and 300% in the above calculation formula are the standard rates of overtime wages stipulated in the Employment Contract Law. At present, the practice of most courts across the country is to calculate according to this, such as Guangdong Province.1Wu Jinjun v. Shenzhen Xindongsheng Property Management Co., Ltd. Guangzhou Branch Labor Dispute Civil Ruling of Guangdong Provincial People¡¯s High Court (2016) Yue Min Shen No.589.However, some courts hold that the foregoing multiplier should deduct 100% for the wages already paid. That is, the calculation rate of overtime pay on public holidays is 200% (300% -100%). Sichuan Chengdu Intermediate Court, Shandong Zibo Zhangdian District Court, and Shandong Jinan Changqing District Court held in their judgments that rate of overtime wages for public holiday should be deducted 100% for ordinary wages already paid for the public holidays, so the rate should be calculated as 200%. The Changqing District Court of Jinan,2Civil Judgment (2020) Chuan 01 Min Zhong No.9503 of the Intermediate People’s Court of Chengdu City, Sichuan Province, issued by Zhao Jinying and Chenghua District Xiangan Building Materials Business Department on the second instance of labor disputes. ¡°Because public holidays are paid holidays, the employer should pay additional two times wages when paying overtime wages.¡± Lu Zhen, Zibo Fire Carving Catering Management Co., Ltd. Civil Judgment of First Instance for Labor Remuneration Dispute, Civil Judgment of People’s Court of Zhangdian District, Zibo City, Shandong Province (2022) Lu 0303 Min Chu 8371, Shandong Leshengyuan Ecological Agriculture Co., Ltd. and the Civil Judgment of the First Instance of Congratulations on Labor Dispute Civil Judgment of the People’s Court of Changqing District, Jinan City, Shandong Province (2021) Lu 0113 Min Chu No.624. ¡°Both parties have no objection on 4-day overtime on public holidays, and the Court confirms that during the probation period from July to September 2019, according to the work record of every Saturday, Overtime on weekend days is 13 days in total. To sum up, after deducting the one time wage that has been paid normally, Leshengyuan Company shall pay Zhuhe overtime wages of RMB 18,193. 3 in total (i.e. RMB 423.1 ¡Á (22 days + 13 days) ¡Á 100% + RMB 423.1 ¡Á 4 days ¡Á 200%), in which the overtime on weekend days is calculated at the rate of 100%.¡±Shandong Province, even held that weekend overtime wages should be paid at only 100% of ordinary wage, as 100% of the ordinary wage should be deducted.

It should be noted that the calculation base of overtime wage, the ordinary hourly wage, should not be lower than the minimum wage standard. If the base is lower than the minimum wage standard, the minimum wage standard should apply if there is no other way to determine a higher ordinary hourly wage.

For the calculation of overtime pay under special workhour systems, please refer to How do I calculate overtime pay under the special workhour systems (such as irregular work hours)?

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  • 1
    Wu Jinjun v. Shenzhen Xindongsheng Property Management Co., Ltd. Guangzhou Branch Labor Dispute Civil Ruling of Guangdong Provincial People¡¯s High Court (2016) Yue Min Shen No.589.
  • 2
    Civil Judgment (2020) Chuan 01 Min Zhong No.9503 of the Intermediate People’s Court of Chengdu City, Sichuan Province, issued by Zhao Jinying and Chenghua District Xiangan Building Materials Business Department on the second instance of labor disputes. ¡°Because public holidays are paid holidays, the employer should pay additional two times wages when paying overtime wages.¡± Lu Zhen, Zibo Fire Carving Catering Management Co., Ltd. Civil Judgment of First Instance for Labor Remuneration Dispute, Civil Judgment of People’s Court of Zhangdian District, Zibo City, Shandong Province (2022) Lu 0303 Min Chu 8371, Shandong Leshengyuan Ecological Agriculture Co., Ltd. and the Civil Judgment of the First Instance of Congratulations on Labor Dispute Civil Judgment of the People’s Court of Changqing District, Jinan City, Shandong Province (2021) Lu 0113 Min Chu No.624. ¡°Both parties have no objection on 4-day overtime on public holidays, and the Court confirms that during the probation period from July to September 2019, according to the work record of every Saturday, Overtime on weekend days is 13 days in total. To sum up, after deducting the one time wage that has been paid normally, Leshengyuan Company shall pay Zhuhe overtime wages of RMB 18,193. 3 in total (i.e. RMB 423.1 ¡Á (22 days + 13 days) ¡Á 100% + RMB 423.1 ¡Á 4 days ¡Á 200%), in which the overtime on weekend days is calculated at the rate of 100%.¡±

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