China continues to be a challenging market in which to do business, but remains one with great growth potential. To succeed, multinational employers entering into and doing business in China must sharpen their employment-related business strategies to leverage opportunities and mitigate risk.
Overtime regulations in China are typically regulated in the People’s Republic of China Labor Law. Many foreign companies find it really complex and hard to understand. Often Chinese employees litigate overtime claims to their employers, therefore, it is really important for the China employer to understand the legalities that govern overtime in China in order to avoid potential discrepancies with the law.
In the jurisdictions like Beijing where the law is highly favorable to the employees, if an employee claims that he/she has not been paid for the overtime, the onus is on the employers to prove the claim is false. In the view of the prominent Chinese lawyers, the courts of Beijing has the perception that employers often deliberately conceal the evidence that a worker has done overtime in order to save money.
Under PRC Labor Law and regulations, overtime pay is clearly specified:
- Any work that exceeds 8 hours per normal work day must be paid at 1.5 times of the employee’s contractually agreed to hourly wage.
- Any hours worked on a weekend day must be paid at 2 times the employee’s contractually agreed to hourly wage.
- Any hours worked on a Chinese statutory holiday must be paid at 3 times the employee’s contractually agreed to hourly wage.
- The number of overtime hours is also regulated by law and is limited to no more than 3 hours per regular work day and no more than 36 hours per month.
According to the Chinese law firms, the current emphasis on mediation in labour disputes reflects a shift towards mediated settlements in China’s judicial system as a whole, but more specifically it is a response to the sudden upsurge in arbitration and labour rights legal cases that followed the implementation of the Labour Contract Law and Labour Dispute Mediation and Arbitration Law in 2008. Both laws gave workers additional ability and incentive to seek legal redress for labour rights violations.
Chinese business lawyers suggest China employers should think strategically about how to document the employment relation- ship to maximize their flexibility and minimize costs and legal risks. Written employment contracts can include key terms such as probationary periods, working time arrangements, wages and benefits.