Overtime cap to remain firmly in place

Foreign firms’ plea for a relaxed overtime cap is rejected again Photo: Le Toan

At last week’s Vietnam Business Forum in Hanoi, Minister Pham Thi Hai Chuyen said the government could not increase workers’ overtime cap at this time.

“If the overtime cap is raised, workers’ health and their lives will be affected. Moreover, this could also lead to an increase in labour accidents,” she said.

Chuyen’s words follow calls from foreign enterprises for Vietnam’s government to lift the overtime cap, which is currently undermining their competitiveness.

According to Article 106.2 (b) of the Code of Labour, overtime is restricted so as to not exceed four hours per day, 30 hours per week, and 200 hours per year. Moreover, if the employer is found to be in violation of this regulation, he or she will be subject to severe sanctions.

However, Shimon Tokuyama, chairman of the Japan Business Association in Vietnam (JBAV) argued that “meeting production orders while fully complying with this restriction on the amount of overtime work will force employers to increase the number of shifts, which will result in a substantial increase in labour costs.”

“Additionally, we understand that a significant number of employees are willing to work longer overtime hours in order to receive greater compensation for such overtime work. We are of the view that as both employers and employees agree, it is reasonable to allow them to increase the number of overtime hours, at least to a reasonable degree.

“We would appreciate it if Vietnam’s government would review and reform its overtime work regulations,” Tokuyama said.

According to the Association of Foreign Enterprises in Vietnam, the existing annual overtime cap of 200 hours remains one of the biggest issues for both domestic and foreign enterprises. Compared with other Asian nations, this Vietnamese overtime cap has been deemed overly restrictive, and a burden to business operations.

They argued that the cap on overtime meant that employees could not earn additional income, which in turn was a contributory factor leading to many strikes.

They proposed that the overtime cap should be 300 hours for all industries and 400 hours for special cases.

Meanwhile, a document from the Council of Taiwanese Chamber of Commerce requested that the Ministry of Industry and Trade and the Ministry of Labour, Invalids, and Social Affairs negotiate and adjust the overtime limit so that it does not exceed 500 hours per year and does not exceed 48 hours per month. It added that the overtime allowance should “meet the company’s needs during the busy seasons for commodities, while limiting the hours of overtime within a month to ensure the good health of workers.”

Vice chairman of the European Chamber of Commerce (EuroCham) Tomaso Andreatta also stressed that the strict rule on overtime hours in Vietnam was detrimental to Vietnam’s competitiveness.

“Increasing overtime limits could positively contribute to Vietnam's regional competitiveness,” he noted.

However, despite repeated requests by these organisations over recent years to increase the overtime cap, the government has always turned them down.

According to the Vietnam General Federation of Labour, if the overtime cap is raised, labourers could become overworked, and this will eat into quality time spent with their families.