China’s Forty Hour Work Week Is Mandatory. Except When It’s Not. Part III.

In parts one and two of this series, I wrote about the “flexible” working hours system as an exception to China’s standard working hours system. China’s labor law and relevant regulations also provide for a second exception: the “comprehensive” working hours system. The latter system applies to three categories of employees who work longer hours because of their particular industries, as follows:

(1)   employees required to work extended hours in the transportation, aviation, railway, shipping, fishing, postal and telecommunications service industries;

(2)  employees subject to seasonal and natural constraints in the resource exploration, construction, salt production, sugar production, and travel industries; and

(3)   other employees in positions that may be suitable for the implementation of the comprehensive working hours system.

Before implementing the comprehensive working hours system, an employer must obtain written permission from the local labor bureau on two fronts: general permission to implement the system, and specific permission for each specific employee designated to work under the system. Once implemented, the designated employees’ working hours will be accumulated over a given period (i.e., a week, month, quarter or year), called a “comprehensive calculation period.” During each such period, the employee’s hours for a month may exceed by up to 36 hours what would have been allowed under the standard working hours system. (In practice, the overtime calculation is even more employer-friendly, as labor bureaus typically define the maximum allowable hours as the employee’s average hours for a month.) Employers who disregard overtime rules risk significant penalties: 150% of an employee’s normal wages for any time exceeding the legal maximum, and 300% of normal wages for such time occurring on a Chinese legal holiday.

The above rules leave several details open to interpretation, and to help clarify matters, in May 2012 China’s Ministry of Human Resources and Social Security issued Draft Regulations on Management of Special Working Hours for public comments. The Draft Regulations introduced the following revisions:

• Categories (1) and (2) above would be expanded to include the electric power, petroleum, petrochemical, and finance industries.

• Category (3) above would instead read: “in accordance with the industry policies issued by the State Council with respect to encouraged or promoted industries, the positions that the PRC Ministry of Human Resources and Social Security deems eligible for implementation of the Comprehensive Working Hours System.”

• The amount of allowable overtime would depend on the length of the comprehensive calculation period. For a period of one week, the maximum overtime permitted per period would be 15 hours (with an additional cap of 36 hours per month). For a period of one month, the maximum overtime permitted per period would be 36 hours. For a period of one quarter, the maximum overtime permitted per period would be 108 hours. For a period of one year, the maximum overtime permitted per period would be 360 hours. In addition, regardless of the period length, an employee could not work more than 11 hours per day, and would be required to have 24 continuous hours of rest every other week.

However, the Draft Regulations are still out for comment, with no end in sight. Unless and until they take effect, the comprehensive working hours system may only be used for employees who fit into one of the three categories listed at the beginning of this post.