Be strict about approval procedures to avoid overtime payment disputes

Employers should implement a strict overtime work approval procedure and design a clause in employment contracts addressing adherence to this and other company overtime policies.

Italy-based luxury brand Gucci is facing a lawsuit from a former employee at one of its Beijing retail shops. The ex-operations manager has filed for unpaid overtime payment that is worth hundreds of thousands of renminbi. The former employee has an attendance sheet, approved by the company, showing he/she consistently worked overtime without compensation over the past two years.

If Gucci fails in the suit, it will be ordered to fully pay the lost overtime wages and if the payment is delayed, may receive an additional fine as stated in Article 85 of the PRC Employment Contract Law (中华人民共和国劳动合同法). These additional damages would not be less than 50% and not more than 100% of the amount payable.

Gao Song, a partner and employment specialist at Runming Law Office said that in daily management, employers should enforce a strict approval procedure for employees initiating overtime work. He recommends employers to distinctly outline this in employment contracts or in the company's stipulations to avoid overtime payment disputes.

“The situation should be that unless the employee receives written approval from the office leader through official approval procedures when he or she initiates overtime work, the pure extension of working time cannot be regarded as overtime work,” he said.

This way, employers can avoid unnecessary disputes by distinguishing the overtime work hours as being caused by the employee's own initiative rather than by the company's express arrangement.

Additionally, employers can consider applying different working hour systems if there are different types of employees. For example, Song suggests implementing either a combined working hour system or a flexible working hour system.

Most importantly, however, is that companies retain a humanised approach to management and strive to create a “happy working” atmosphere and culture that “considers employees' feelings”, noted Song.

“In my experience, many employees are displeased with employers during the hiring period,” he said. “Therefore, they sometimes choose to use a lawsuit to relieve their displeased feelings after their dismissal.”

Despite mandatory provisions relating to overtime work and pay in Articles 41 and 44 of the Employment Contract Law, legal practitioners say that in general practice, employers are only ordered to pay the overtime wages and are seldom punished if they violate the law. –CM

See also:

Hiring foreigners 07 Jul 2011
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From hiring to firing 15 Dec 2010