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Raising overtime cap: graduated rates needed for calculating pay

03/06/2019

The Government has submitted to the National Assembly the draft revised Labour Code with many new regulations, including raising the cap on overtime to 400 hours a year from the current 300 hours.  

The raise of the cap on overtime is made in response to enterprises’ request and the need of a part of the working force. The new cap is set based on consideration of various factors concerning socio-economic situation, competitiveness of the labour market, investment attraction, enterprises’ needs, and workers’ needs in terms of economic reasons, health and wage.

However, the draft revised regulation specifies that the new maximum overtime working hours are only applied to certain occupations and at certain times such as peak times of orders.
Dao Thi Thu Huyen, representative of the Japanese Business Association in Vietnam, said the raise of the overtime cap suits enterprises’ business and production needs. She cited the example of those operating in information technology where research and development of products require long working time.
Most enterprises engaging in subcontracting could apply for the maximum 300 hours of overtime a year. If the new regulation stipulates that the new cap is applied only for special sectors, the question is how to define those “special sectors”.
According to the draft revised Labour Code, employers must pay workers higher for their overtime working hours. The pay must be at least 150% of the standard wage for overtime working hours on a normal working day, 200% for overtime working hours on weekends, and 300% for overtime working hours on public holidays.
The issue of overtime work must be considered based on various factors, from workers’ health, employment, labour safety and the legitimate interests and benefits of workers, in the context of the world trend of reducing working hours and increasing resting time.
Mr. Le Dinh Quang, deputy director of the Department of Labour Relations under the VGCL, said calculating overtime pay on a graduated basis will make employers re-think when they want to ask workers to do overtime.
“Calculating overtime pay using graduated rates will prevent enterprises from paying low wages in order to make workers do overtime work, instead of recruiting more workers,” Quang said.
To address the negative effects of overtime work and ensure workers’ health, the draft revised Labour Code stipulates the voluntary principle, under which only when workers agree can enterprises mobilise them to work extra hours. Besides, the draft also requires that total working hours in a day, both normal and overtime, must not exceed 12 hours.
 
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