Is Offsetting The Employee’s Overtime Hours By Compensatory Leave Legal?

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Is Offsetting The Employee’s Overtime Hours By Compensatory Leave Legal?

The binding relationship between the Employer and the Employee always has incurred issues that need to be resolved and must comply with the labor law provisions. However, for some specific matters, there are still no available guidelines or regulations to apply.

According to Article 107 of the Labor Code 2019, the Employer must ensure that the number of overtime hours of the Employee does not exceed 200 hours in 01 year, except for some particular cases as regulated by the Government, the total number of overtime working hours shall not exceed 300 hours in 01 year. Sometimes, the Employers organizes the Employees to work overtime and then arrange compensatory leave on another working day. So, whether offsetting the Employee’s overtime hours by giving them compensatory leave comply with the current labor laws? And what are the relevant legal issues that need to be noted?  

Whether offsetting the Employee’s overtime hours by giving them compensatory leave comply with the current labor laws?

Firstly, the Employer is entitled to organize for the Employee to work overtime when all of the following conditions are met:

(i) Obtaining the Employee’s consent for working overtime hours, working overtime location and overtime work. 

The consent of the Employee can be considered a precedent condition in organizing working overtime because it directly affects the Employee’s benefits – who is acknowledged as the weaker party in the labor relationship. However, the Labor Code 2012 just had the general provisions about the Employee’s consent, not had any specific instructions on what needs to be agreed by the Employees. This unclear regulation had shown many shortcomings in practical application, not ensured the rights of the Employees, which led to the Employees not knowing how to protect their own benefits in situations such as overtime working location is different from working places, overtime job is different from the provisions of the labor contract, … In order to solve these shortcomings, the current Labor Code has stipulated and guided what need the consent of the Employee to work overtime.

If the Employee does not agree with any of these above three contents, the Employer is not entitled to request the Employee to work overtime. When the Employer intentionally organizes the Employee to work overtime without the Employee’s consent, they may be fined administrative violation with a fine from VND 20,000,000 to VND 25,000,000.

(ii) Ensuring that the number of overtime working hours of the Employee does not exceed 50% of the regular working hours 01 day; in case of applying regulation on weekly work, the total regular working hours plus overtime working hours shall not exceed 12 hours in 1 day; 40 hours per month; 200 hours in 1 year, except for some exceptional cases as regulated by the Government, the total number of overtime working hours shall not exceed 300 hours in 1 year.

When organizing working overtime no more than 300 hours in 1 year, the Employer must notify in writing the specialized labor agency of the provincial People’s Committee. In case the employer does not comply with this condition, an administrative sanctioning from VND 2,000,000 to VND 5,000,000 may be imposed for this act.

Secondly, regarding the regulations on the organization of compensatory leave after working overtime, the Labor Code 2012 stipulates that after a period of many consecutive days of overtime work during one month, the Employer must arrange for compensatory leave for the duration in which the Employee has not taken the leave. However, this provision is no longer mentioned in the Labor Code 2019, and there is no replacement. Therefore, the Employer is not required to organize the Employee to take compensatory leave after working overtime.

A general principle of labor law is always to encourage Employers to apply more favorable regulations to employees than law. The undeniable benefit of organizing compensatory leave is creating conditions for employees to rest and recuperate after a long working time, thereby improving work efficiency. However, the Employee’s benefit may be affected because not all employees understand the overtime or wage calculation regulations other related rules to protect their benefits. For example, when organizing compensation leave after working overtime, the Employee may be undercounted or offset the wage incorrectly between overtime work and the time of compensation leave because the wage of these two periods is different. This is also an issue that employers need to pay attention to and have the responsibility to strictly comply with the provisions of the law to ensure the legal benefits of employees, and at the same time to ensure that employers are not handled administrative violations.

From the above analysis, the Employer can organize the Employee to take compensatory leave after working overtime but must organize overtime to meet the statutory conditions and ensure the Employee’s benefits.

Resolving the wages when the Employer organizes to take compensatory leave after working overtime.

According to the labor law provisions, the Employee who performs overtime work shall be paid a wage calculated based on wage unit for piece work or the wage of their current work. In detail, work overtime on regular days, the Employee shall be paid at least 150%; on a weekly day off, at least 200%; on public holidays and paid leave days, at least 300%, excluding the wage for public holidays and paid leave days if the Employee receives a daily wage. The Employee who performs night work shall be paid an additional amount of at least 30% of the wage calculated according to the wage unit for piece work or piece rate or the wage for the work on a regular working day. The Employee who performs overtime work at night shall be paid according to both above regulations; furthermore, they shall be paid an additional amount of 20% of the wage calculated according to the wage unit for piece work or piece rate or the wage for the work on a regular working day. Thus, whenever overtime work arises, the Employer is responsible for paying the overtime wage to the Employee.

Suppose the Employer violates the regulations on overtime wages, specifically for the act of not paying or not paying enough overtime wages, deduction of the Employee’s wage illegally. they will be sanctioned administrative violations with a fine from 5,000,000 VND to 50,000,000 VND.

It can be seen that the Employer is not prohibited from organizing the Employee to take compensatory leave after working overtime under the labor law. But when having such need, the Employer should pay attention to the conditions for organizing overtime working, calculating the overtime wage, and balance the time the Employee is allowed to take compensatory leave and the equivalent wage or more than the amount calculated by law. At the same time, the Employer should ensure that Employees have the right to choose whether to take compensatory leave or receive overtime wage to avoid being handled for administrative violations as mentioned issues.