24 May 2018

Hey bro, do you know overtime payment?

This article was written by Lucy Lu(Partner), Hang Ying(Associate), Liu Shibo(Associate assistant).

One day in 2018, IT worker M came across basketball superstar K.

Round 1

M: What makes you so successful?

K:Have you ever seen the view of Los Angeles at 4 a.m.?

M: No.  I’m usually still working at that time.

K: …

K:You work so late!  You must have got a great amount of overtime payment!

M: What is overtime payment?

K: …

There was an embarrassing silence…

Hey guys, is it ok to work until four in the morning without any overtime payment?  Let’s figure it out by studying the concept of “overtime” under the PRC Labor Law.

What is “Overtime”

The PRC Labor Law stipulates that employers can extend the working hours of employees after consultation with labor union and employees due to production and business needs.  Accordingly, we may understand that “overtime” shall mean, due to the employer’s working arrangement, an employee has to extend his/her working hours beyond the standard working hours on work days, or works on rest days and the employer cannot provide leave in lieu, or when an employee works on public holidays.

It is noteworthy that the initiator of “overtime” is legally defined as employer.  In other words, if an employee voluntarily extends his/her working hours or works on rest days or public holidays as opposed to being given extra work or workload that cannot be completed during normal working hours by the employer, his/her work will not be defined as “overtime” work, and the employer does not need to make overtime payment under such circumstances.  For IT worker M, if he voluntarily works overtime for promotions, salary increases, etc., then the employer definitely does not need to make overtime payment.

In labor dispute cases, employees often come up with an attendance record and claim that they have extended working hours beyond the standard working hours. In this case, can we say the additional working hours recorded in the attendance record indicate the employee’s overtime work?  The answer is negative.  On the one hand, the attendance record cannot prove the reason why the employee stayed in the company beyond standard working hours is to complete overtime work due to employer’s work arrangement. If the employee did this simply for personal convenience, such as self-learning in the company or using the company’s gym or having dinner in the company’s restaurant before clocking off, such “additional working hours” should not be recognized as overtime.  On the other hand, a lot of companies have already applied for a special working hour system for certain positions, such as a flexible working hour system for senior executives.  For such positions, it is impossible to determine whether they have worked overtime based on the attendance record.

In case an employee claims overtime payment based on their attendance record, in order to prove the additional working hours recorded are not overtime work, the employer can try the following approaches: (1) to prove that it is stipulated in the company’s attendance management rules that the attendance record is only used to define whether the employee arrives late, leaves early or has absenteeism, instead of serving as the basis for defining overtime, therefore distinguishing between attendance and overtime; (2) to prove that the overtime approval system is stipulated in the company’s internal rules and regulations and that the company is actually implementing such system with the employees, according to which when employees need to work overtime, they should submit applications and get approval from relevant supervisors in advance; (3) to prove that the employee is working on his/her private affairs rather than job tasks by providing restaurant consumption records, gym records, etc.; or (4) to provide approval for special working hour system to prove that such special working hour systems, rather than standard working hour systems, shall apply to the employees.


Round 2

K:Late night work without overtime payment, the turnover rate at your company must be pretty high.

M:Um…the turnover rate is ok…  Actually we are quite loyal to our company, despite the heavy workload. Maybe that’s because we share the same dream, or because we can earn one to two million yuan a year.

K: Um…

M:Well, Hammer Wang did leave the company a few days ago, filing a lawsuit against the company claiming overtime payment in the amount of 5 million yuan.

K:Overtime payment of 5 million yuan?  Are you serious?  Did the company make the overtime payment?

M:No, the company finally won the case. It is said that the judge thought she did not provide any evidence, so her claims were not supported.

K: You mean Hammer is a woman?

M:…

As is known to all, the employer usually bears heavier burden of proof in labor dispute cases, but does this mean that Hammer does not need to provide any evidence when claiming overtime payment?  How shall the burden of proof be assigned in overtime cases?

How shall the burden of proof be assigned in overtime cases?

Article 6 of the PRC Law on Mediation and Arbitration of Labor Disputes stipulates that when a labor dispute arises, the parties have the responsibility to provide evidence for their own claims.  Where the evidence related to the dispute matter is handled and managed by the employer, the employer shall provide such evidence. If the employer fails to provide the evidence, it shall assume any unfavorable consequences.  In addition, Article 9 of Interpretation III of the Supreme People’s Court of Several Issues on the Application of Law in the Trail of Labor Dispute Cases stipulates that where an employee claims overtime payment, the employee shall bear the burden of proof as to the fact of overtime work. If the employee has evidence that the employer possesses such evidence on the existence of overtime work, and the employer fails to provide such evidence, the employer shall bear the adverse consequences.

Based on the above, burden of proof on overtime claims should be assigned on the basis of the principle that “who makes the claim should bear the burden of proof”.  In judicial practice, the burden of proof regarding overtime fact is usually borne by the employee unless there is evidence that relevant evidence is possessed and managed by the employer. Therefore, in case an employee claims overtime payment, he/she needs to provide preliminary evidence for the overtime facts, such as attendance records, other emails or materials indicating the work content.  In case the employee cannot provide evidence on the existence of overtime fact, or evidence on the company’s possession and management of the evidence regarding the employee’s overtime fact and the company’s refusal to provide, or evidence on the company’s arrangement on overtime work, relevant consequence should be borne by the employee.  As to the burden of proof for the employer, the court generally takes the idea that it is the employer’s obligation to keep complete and effective attendance records and to keep such attendance records, wage payment vouchers and other materials for two years.  If the employer cannot provide such materials, the employer may need to bear the unfavorable consequences of its lack of proof.  In case a senior executive claims for overtime payment, the court usually considers such employee shall bear more burden of proof compared with ordinary employees. For example, if the employee is the manager in charge of human resources or the actual controller of the company, the court usually considers such employees should have the ability to keep or collect relevant evidence (such as attendance records, etc.) to prove the existence of overtime facts, therefore such senior managers shall provide relevant evidences and bear relevant liabilities due to their lack of proof.


Round 3

K: So Hammer provided no evidence. No wonder she lost the case.

M: I felt for her when she lost the case.

K: Um…you are a good colleague.

M: Um…that’s because… she is gorgeous…

K:…

M:After she lost the case, I tried to comfort her by treating her with a spicy hot pot with additional sesame sauce. I also bought her a pair of sports shoes so she could exercise.

K: Um…are you two still friends now?

M:Not anymore.

K: It’s no big deal.  Be cool, bro.  You’ll make better friends in the future.

M:Well, actually, Hammer is my girlfriend now.

KO!

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