OVERTIME WAGES IN LABOR CODE 2025
Topic 26:
OVERTIME WAGES IN LABOR CODE
Senior Lecturer, MSc. Đoàn Công Yên
SUMMARY OF THE CASE AND THE COURT’S DECISION
[Judgment No. 01/2023/LD-PT dated March 31, 2023, by the Bắc Ninh Provincial People’s Court concerning a wage dispute.]
Case Summary:
Mr. Phạm Hùng Cường began working for HTNS-L Logistics Co., Ltd. (abbreviated as L Company) in October 2020. After completing a two-month probation period, he signed Labor Contract No. 0112/2020/HDLD on December 1, 2020, with Mr. Kim Jea, the company’s legal representative and General Director.
The contract specified that L Company hired Mr. Cường as a truck driver. His tasks were outlined in the job description and included any other assignments by his direct manager or department head. The contract was of an indefinite term, with working hours set at 10 hours/day and 26 days/month. His basic salary was 7,000,000 VND/month, plus a revenue-based salary of 5% calculated on the truck’s revenue up to the 26th of each month. Overtime payments were determined according to Vietnamese labor law. Salary was paid in cash or by bank transfer on the last day of each month. On April 12, 2022, Mr. Cường submitted his resignation to the company.
Mr. Cường requested the court to compel L Company to pay him overtime wages amounting to 74,436,379 VND.
Court Decision:
The court partially upheld Mr. Phạm Hùng Cường’s claim. It ordered L Company to pay him 2,540,192 VND in overtime wages for the period from October 2020 to August 2021.
COMMENTARY
I. Introduction
Working overtime or at night provides employees with an opportunity to increase their income and meet personal and family needs. Employee wages for overtime or night work are calculated at higher rates than those for regular working hours. This may increase costs for employers, leading some, either intentionally or unintentionally, to inaccurately calculate employees’ overtime hours and wages.
Through Judgment No. 01/2023/LD-PT dated March 31, 2023, by the Bắc Ninh Provincial People’s Court regarding a wage dispute, we analyze two issues:
(i) The grounds for determining overtime; and
(ii) Employee wages for overtime and night work.
II. Legal Issues
- Definition and Basis for Determining Overtime Work
1.1. Definition of Overtime Work
Under EU regulations, overtime refers to work performed by employees exceeding their normal working hours, which has been officially requested and approved by management. It is not part of an employee’s regular scheduled workweek, and employees may be compensated accordingly [See: https://www.eurofound.europa.eu/en/european-industrial-relations-dictionary/overtime#:~:text=The%20definition%20of%20overtime%20used,usually%20attracts%20a%20premium%20rate.]. Similarly, Article 5 of Thailand’s Labor Protection Act defines overtime as work performed during a workday, rest day, or beyond the normal agreed working hours as stipulated under Article 23, depending on the specific situation.
Vietnamese lawmakers define overtime in the 2019 Labor Code as “the time worked beyond the normal working hours as stipulated by law, collective labor agreements, or internal labor regulations.”
Thus, to determine overtime hours, employees must first be aware of normal working hours. Article 105 of the 2019 Labor Code states: Normal working hours must not exceed 8 hours per day and 48 hours per week. Employers may arrange work by hours, days, or weeks. For daily work arrangements, normal working hours must not exceed 10 hours per day and 48 hours per week.
1.2. Basis for Determining Overtime Work
The definition of overtime in the 2019 Labor Code highlights that the basis for determining overtime includes legal provisions, collective labor agreements, and internal labor regulations. In practice, whether an employee has worked overtime is primarily determined through agreements between the parties during the signing or execution of the labor contract.
In Judgment No. 96/2010/LD-PT dated January 22, 2010, by the Ho Chi Minh City People’s Court, Mr. Nguyễn Đức requested Company S to pay for 5.5 days of overtime worked on Saturdays and Sundays. The defendant, Company S, argued that Mr. Nguyễn Đức did not have an approved overtime plan or a time sheet for overtime work, so the company refused to pay. The court found that the probationary invitation document did not indicate any agreement between the parties regarding working overtime on Saturdays and Sundays. Hence, the appellate court did not have grounds to consider Mr. Nguyễn Đức’s claim.
Similarly, in Judgment No. 283/2008/LD-ST dated February 28, 2008, by the Ho Chi Minh City People’s Court, “The trial panel found that during his tenure at Nobland Company, Mr. Kiều stayed at the company for additional time amounting to 338 hours.
However, he did not register this as overtime work per the company’s procedures, nor did he raise concerns about unpaid overtime hours while receiving his monthly salary. Therefore, there is no basis to assert that the additional time spent at the company was for overtime work for the company or for personal reasons. Accordingly, the trial panel found no grounds to accept Mr. Kiều’s claim for the time spent at the company that he regarded as overtime work.”
To be considered overtime, the primary condition is that the employer must request it, or the employee must prove that the employer compelled them to work. Simply working beyond regular hours is not sufficient for an employee to claim overtime recognition from the employer. Based on various judgments, employees can rely on the following to request the employer to calculate overtime: agreements in the labor contract, approved overtime plans, registered overtime forms, or time sheets.
In cases where the parties do not agree on overtime arrangements, the court will rely on actual working hours and the legally defined standard working hours to determine overtime.
In the case of Mr. Cường and L Company, the parties disagreed on how to calculate actual working hours, leading to conflicts over overtime calculations. Mr. Cường proposed calculating overtime as (driving time + stoppage time) – 8 hours/day = overtime hours. Conversely, L Company relied solely on GPS data and rejected Mr. Cường’s self-calculated method. Overtime was calculated based on GPS data for hours exceeding 8 hours/day of actual work.
The court found that the labor contract did not specify how daily overtime should be calculated. Both parties agreed on the GPS data’s validity. However, GPS calculates time from when the key is inserted into the vehicle, during which the driver may perform any task, even outside the vehicle. A typical workday for freight vehicles involves receiving orders from the team leader, inspecting the vehicle, collecting tools and road expenses, driving to the loading location, supervising the loading and sealing process, delivering goods to the destination, supervising unloading, and returning to the depot.
Drivers manage their start and end times for deliveries independently, with no specific trip duration set by the company. Additionally, as a freight truck driver, tasks such as cargo arrangement, customs procedures, and delivery handovers are mandatory parts of the job. The company is only obligated to pay overtime if these tasks extend the workday beyond 8 hours. Mr. Cường also had the duty to report such occurrences, which he failed to do during his employment. Thus, the trial court rejected Mr. Cường’s overtime calculation, and the appellate court upheld this position.
- Employee Wages for Overtime Work
The rules on overtime wages serve two purposes. First, they compensate employees for hours worked beyond normal working hours. Second, the higher overtime rates aim to limit the number of weekly working hours. By requiring employers to pay additional allowances for overtime hours, labor costs increase. Overtime wages in this context are seen as a critical factor influencing employers’ decisions on whether to request employees to work overtime [Working Conditions Laws 2012: A Global Review, https://www.ilo.org/publications/working-conditions-laws-2012].
In Vietnam, employees working overtime are paid wages calculated as a percentage of the unit price or their actual salary for the job performed, as follows: at least 150% on regular days; at least 200% on weekly rest days; and at least 300% on public holidays, Tet, or paid leave days—excluding the base salary for holidays or paid leave days for employees who receive daily wages [Article 98 of the 2019 Labor Code]. Compared to other countries in the Asia-Pacific region, Vietnam’s overtime wage rates are relatively high, ensuring employees’ livelihoods.
The actual hourly wage for regular working days is determined by dividing the actual monthly salary for the job performed by the total actual working hours in the month (not exceeding 208 hours for normal working conditions and excluding overtime hours).
For employees paid daily or weekly, the actual hourly wage is calculated by dividing the salary for that day or week (excluding overtime pay and additional pay for night work) by the total actual working hours for that day or week (not exceeding 8 hours/day and excluding overtime hours). The above-calculated hourly wage does not include overtime pay, additional pay for night work, or salary for holidays, Tet, or paid leave days as stipulated in the Labor Code.
In the labor dispute between Mr. Hòa and TT Company [Judgment No. 02/2018/LD-ST dated January 24, 2018, by the People’s Court of District 12, Ho Chi Minh City], the court determined: “Clause 1, Article 3 of the ‘Seasonal Contract’ dated April 2, 2017, provided by the defendant, stated the plaintiff’s base salary ranged from 3,700,000 to 4,500,000 VND per month. The plaintiff claimed a salary of 4,500,000 VND per month with an additional allowance of 300,000 VND but could not provide evidence.
In contrast, the defendant admitted to a base salary of 3,700,000 VND per month with a diligent attendance and responsibility allowance of 500,000 VND per month. The defendant’s admission is evidence requiring no further proof under Clause 2, Article 92 of the 2015 Civil Procedure Code. Mr. Hòa did not meet attendance requirements in May 2017, making him ineligible for the diligent attendance allowance. Thus, it is established that Mr. Hòa’s May 2017 salary was 3,700,000 VND per month.” This figure was used by the court to calculate the actual hourly wage for Mr. Hòa.
Regarding salary allowances, these payments serve to compensate for factors such as working conditions, the complexity of the job, living conditions, and the attractiveness of the job that may not be fully accounted for in the salary based on job or title. Under the 2019 Labor Code, allowances are an integral component of wages.
In the “Seasonal Contract,” Mr. Hòa and TT Company agreed on “diligence and responsibility allowances of 500,000 VND/month.” Diligence allowances are typically calculated based on the employee’s actual attendance compared to the regulations set by the employer, while responsibility allowances reflect the nature of the job. If the contract between the parties only specifies “diligence and responsibility allowances of 500,000 VND/month,” this agreement lacks clarity and detail.
The court’s exclusion of the “diligence and responsibility allowances of 500,000 VND/month” from Mr. Hòa’s wages when calculating overtime pay requires further consideration. To accurately determine the actual hourly wage, the court should thoroughly analyze all components of the employee’s wages and income, including base salary, salary allowances, welfare benefits, and bonuses.
III. Conclusion
Overtime wages represent a vital provision of the 2019 Labor Code. Effectively understanding and applying this provision necessitates familiarity with the rules governing normal working hours and overtime hours. To protect their legitimate rights and interests, both parties should negotiate and clearly stipulate overtime clauses and overtime pay in labor contracts. Moreover, for specialized industries such as truck driving, employees should proactively negotiate the calculation method for actual working hours to prevent disputes over overtime pay with employers.
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“The article’s content refers to the regulations that were applicable at the time of its creation and is intended solely for reference purposes. To obtain accurate information, it is advisable to seek the guidance of a consulting lawyer.”
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