[Q&A] Is Cutting Overtime a Labor Law Violation?
2025. 3. 7
Question: Does not arranging overtime, which leads to a reduction in employee income, constitute "failure to provide labor conditions"?
Answer: According to Article 38 of the Labor Contract Law, if an employer fails to provide labor protection or labor conditions as stipulated in the labor contract, the employee may terminate the contract and demand economic compensation from the employer. In practice, overtime pay often constitutes a significant portion of many employees' income. If an employer reduces overtime hours or ceases to arrange overtime, employees may become dissatisfied due to the resulting decrease in overall income. However, we believe that "labor conditions" generally refer to the working environment, facilities, equipment, and necessary protections required for employees to perform their duties, and do not include "arranging overtime."
The Labor Law explicitly sets limits on overtime hours and increases the standards for overtime pay. These provisions aim to prevent employers from excessively extending working hours, thereby safeguarding employees' physical health and right to rest. From the overall legislative intent of the Labor Law, it is clear that overtime is not encouraged. Therefore, we believe that whether to arrange overtime is generally within the employer's operational discretion, and the failure to arrange overtime, which results in a reduction in employees' overall income, does not constitute "failure to provide labor conditions" as defined by the Labor Contract Law.
However, in rare cases in practice (e.g., Case No. (2020) Yue 19 Min Zhong 8629), it has been held that deliberately refusing to arrange overtime for a specific employee without justifiable reason, particularly in a context where overtime is uniformly arranged for others, may constitute "failure to provide labor conditions." Although such cases are uncommon and their reasoning remains debatable, we recommend that employers adhere to the principles of reasonableness and fairness when arranging overtime for employees, and avoid obvious discriminatory practices.