Answer:
1.Is the Employer obliged to arrange for the Employee to take compensatory leave for the period the Employee has not taken leave? What leads to that result?
According to the Labour Code, overtime is the period of time the Employee spends working beyond normal working hours as prescribed by the Labour Code, in the CLA or ILR of the enterprise[1]. Previously, when the Decree 45/2013/ND-CP of the Government guiding the Labour Code 2012 on working hours, rest time, and occupational safety and health were in effect, the Employer is obliged to arrange for the Employee to take compensatory leave for the time that the Employee can not rest during the overtime period not exceeding 07 consecutive days. If it is not possible to arrange for the Employee to take full compensatory leave for the overtime of the Employee, the Employer must pay Employee the overtime salary pursuant to Article 97 of the Labour Code 2012. Accordingly: (i) on working days, at least comparable to 150% ; (ii) on weekends, at least comparable to 200%; (iii) on public holidays or paid leave, at least comparable to 300% (excluding wage for holidays or paid leave for the Employee receiving daily wage); (iv) working overtime at night, in addition to the wage under items (i), (ii), (iii) above and the payment for night work (at least comparable to 30% of the wage rate calculated at the wage unit price or the job-based wage of normal working day), the Employee is also paid an additional 20% of the wage rate calculated at the wage unit price or the wage for such work on the day time[2].
However, in accordance with the Labour Code 2019 which came into effect on 01/01/2021, the above-mentioned regulation is no longer valid. Therefore, after each overtime period of consecutive days, the Employer does not need to arrange for the Employee to take compensatory leave for the time he or she has not taken rest.
In fact, some Employers will give the Employee compensatory leave after overtime working days (whether consecutive or not) to reduce the cost of overtime paid for the Employee because they believe there is no need to pay for overtime when the Employee is entitled to take compensation leave. However, giving the Employee compensatory leave after working overtime without paying overtime salary is not in line with the labour law and the Employer runs a risk of administrative penalties up to VND20,000,000 for from 01 to 10 Employees involved[3]. Therefore, even if the Employer gets the Employee’s consent on taking compensatory leave after a period of continuous work, they are required to pay the Employee overtime wages in any case.
2. How will overtime salary be calculated if the Employee is not entitled to compensatory leave?
How the Employer pays the Employee for overtime work depends on the actual situation of overtime that the Employee has made but the basis of the general salary calculation method still based on Article 98 of the Labour Code. Below are some of the situations that the Employer and the Employee may encounter while working overtime and how salary is calculated in those cases:
- Employees work overtime during the daytime on the normal working day(s): 150% * A. In which, “A” is the actual hourly wage of a normal working day.
- Employees work overtime during the daytime on the weekly day(s) off: 200% * A.
- Employees work overtime during the daytime on public holidays, paid leave: 300% * A.
- Employees work overtime at night on a normal working day (in case Employees have not worked overtime during the day): (150% * A) + (30% * A) + (20% * 100% * A) = 200% * A; or
- Employees work overtime at night on a normal working day (in case Employees have worked overtime during the daytime): (150% * A) + (30% * A) + (20% * 150% * A) = 210% * A; or
- Employees work overtime at night on weekly day(s) off: (200% * A) + (30% * A) + (20% * 200% * A) = 270% * A; or
- Employees work overtime at night on public holidays, paid leave: (300% * A) + (30% * A) + (20% * 300% * A) = 390% * A.
3. In what cases is compensatory leave applicable?
The Labour Code only allows the Employee to take compensatory leave on the next working day of the weekly day off that coincides with public holidays as prescribed by laws[4]. Besides that, there are no other cases where the Employer is entitled to request the Employee to take compensatory leave. Thus, we could assume that it violates the labour law if the Employer decides to allow the Employee to take compensatory leave after many consecutive days of overtime with the aim of not paying overtime salary. In this case, in order to avoid unnecessary labour disputes, if the Employee needs to take a break after a consecutive period of overtime work, the Employer and the Employee can negotiate to take unpaid leave[5] or annual leave[6].
[1] Article 107.1 of the Labour Code.
[2] Article 4.3 of the Decree No. 45/2013/ND-CP of the Government dated 10/03/2013 (expired from 01/02/2021).
[3] Article 5.1 and 16.2 of the Decree No. 28/2020/ND-CP of the Government dated 01/03/2020.
[4] Article 111.3 of the Labour Code.
[5] Article 115.3 of the Labour Code.
[6] Article 113.1 of the Labour Code.
