New resolution expanding employees´ overtime limitation in terms of socio-economic recovery

The legal framework on working overtime for employees is regulated in Labor Code No. 45/2019/QH14 (the “Labor Code 2019”) and Decree No. 145/2020/ND-CP (the “Decree 145/2020”). However, due to adverse effects after the Covid-19 pandemic, the Standing Committee of the National Assembly has ratified Resolution No. 17/2022/UBTVQH15 (the “Resolution 17”) to change these regulations, giving enterprises a legal ground to deal with their employees on working overtime with new and loosened limitations for the purpose of socio-economic recovery and development.

Expansion of employee’s overtime limitation

Annual overtime hours

The Resolution 17 now allows the employer to agree with its employees on annual overtime hours of up to 300 hours, regardless of their industry or circumstances, except for some cases where the employees are:

aged between 15 and under 18 years old;
having mild disabilities with a work capacity reduction of at least 51 %, or employees with severe disabilities or extremely severe disabilities;
doing heavy, hazardous, dangerous or extreme-ly heavy, hazardous or dangerous work;
female employees in their 7th month or more of their pregnancy (or the 6th month or more of her pregnancy in case they work in a highland, deeplying, remote, border or island area); or
female employees raising a child under 12 months.

Monthly overtime hours

In case of being permitted to arrange for their employees to work overtime up to 300 hours per year, the employer may arrange working overtime up to 60 hours per month. Before the Resolution 17, this number was limited to 40 hours under the Labor Code 2019.

Required procedures

To arrange for the employees to work overtime, the employer is required to (i) reach a mutual agreement with the employees, and (ii) notify the labor authority of the provincial People’s Committee in accordance with the laws if the employee’s annual overtime is more than 200 hours, but not exceeding 300 hours. The employer in this cir-cumstance should make a written agreement with the employees on overtime, including inter alia overtime-working date, working location and overtime hours for which the employees are required to work.

Effectiveness

Though the Resolution 17 was ratified on 23 March 2022, the provisions on expanding the employees’s overtime limitation per year under this new Resolution took effect as of 1 January 2022, and the others have been effective since 1 April 2022.

Our conclusions

In short, Resolution 17 loosens the restrictions on the overtime working as previously regulated in the Labor Code 19 and Decree 145/2020. Particularly, before the Resolution 17, the employers have been subject to very restrictive regulations on arranging for their employees to work overtime not exceeding (i) 40 hours per month and (ii) 200 hours per year (except for some industries and circumstances). Currently, the cap is set at 60 hours per month and 300 hours per year, regard-less of industry or circumstances.

Impact on employers

The employers may avail of this amendment to recover their business activities, after adverse effects due to the Covid-19 pandemic, by arranging for their employees’ overtime with a new loosened cap per year/month. However, it should be noted that if an overtime working regime is applied, the employer is required to (i) fulfill the mandatory procedures under the laws (i.e. getting the employee’s consent, notifying in writing to competent authority) and (ii) providing more fa-vorable benefits to their employees than those regulated by the labor laws.