Vietnam: From January 1, 2021, how is overtime pay calculated?

Vietnam: From January 1, 2021, how is overtime pay calculated? (Internet image)

1. Conditions for employees to work overtime

Clause 2, Article 107 of the Labor Code 2019 stipulates that an employer in Vietnam has the right to request an employee to work overtime when all of the following conditions are met:

- The employee agrees to work overtime;

- The number of overtime working hours of the employee does not exceed 50% of the normal working hours in 01 day; in case of weekly work, the total normal working hours plus overtime working hours shall not exceed 12 hours in 01 day, and 40 hours in 01 month;

- The total overtime working hours do not exceed 200 hours in 01 year, except for the following cases:

+ Manufacture, processing of textile, garment, footwear, electric, electronic products, processing of agricultural, forestry, aquaculture products, salt production;

+ Generation and supply of electricity, telecommunications, refinery operation; water supply and drainage;

+ Works that require highly skilled workers that are not available on the labor market at the time;

+ Urgent works that cannot be delayed due to seasonal reasons or availability of materials or products, or due to unexpected causes, bad weather, natural disasters, fire, hostility, shortage of power or raw materials, or technical issue of the production line;

+ Other cases prescribed by the Government.

2. Instruction for calculating overtime pay under the law in Vietnam

According to the provisions of Article 98 of the Labor Code 2019, an employee in Vietnam who works overtime will be paid an amount based on the piece rate or actual salary as follows:

- On normal days: at least 150%;

- On weekly days off: at least 200%;

- During public holidays, paid leave, at least 300%, not including the daily salary during the public holidays or paid leave for employees receiving daily salaries.

Currently, Article 6 of Circular 23/2015/TT-BLDTBXH amended by Circular 47/2015/TT-BLDTBXH stipulates the calculation of overtime pay as follows:

* Every employee who receives time-based wage and works overtime in addition to the working time established by the employer shall receive overtime pay, which is calculated as follows:

Where:

- The overtime pay on a normal working day is at least 150% of actual hourly wage on a normal working day.

- The overtime pay on a weekly day off is at least 200% of actual hourly wage on a normal working day.

- The overtime pay on a public holiday or paid day off (exclusive of wages of public holidays and paid days off prescribed by the Labor Code) is at least 300% of actual hourly wage on a normal working day. This rate is applied to employees receiving daily wages.

* With regard to piece workers who receive overtime pay when the employees and the employer reach an agreement on overtime work in additional to normal working hours to increase the quantity of completed products or works in additional to the agreed workload, overtime pay is calculated as follows:

(In which: at least 100%, 200%, 300% of piece rate which are similar to those for employee who receives time-based wage).

In addition, Clause 2, Article 98 of the Labor Code 2019 stipulates that  an employee who works at night will be paid an additional amount of at least 30% of the normal salary.

Thus, working overtime will help employers complete their work faster and generate more profits. However, this will result in employees exerting more labor. Therefore, labor laws have established provisions on overtime pay that are entirely appropriate, not only increasing income for employees but also compensating for the health damage and avoiding the possibility of employers take advantages and exploiting labor.

Le Vy

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