On 2 February 2006, Mr. Meng joined an investment company in Beijing (“Company”). His job position is non-office worker of comprehensive department and driver. On 8 July 2010, the Company terminated its employment contract with Mr. Meng on the ground that Mr. Meng violated Company’s regulations. After arbitration, Mr. Meng filed his case with the court and raised many claims including overtime pay.

To support his claim for overtime pay, Mr. Meng submitted evidence including the application forms for overtime to prove his overtime work during rest days and public holidays. Accordingly, the court of first instance ordered the Company to pay Mr. Meng the overtime pay for the rest days and public holidays, in the amount of RMB 5,604.6.

The company refused to accept the judgment of first instance, and appealed to Beijing First Intermediate People's Court (“Court of Appeal”), alleging that Mr. Meng was absent during his employment, and his absence should offset the overtime, thus the Company should not be required to pay overtime pay. The Court of Appeal held that the overtime pay equals two or three times the normal payment for working days, so the deducted wages due to absences could not offset overtime pay. In addition, Mr Meng’s absence should be dealt with according to the regulations and policies of the Company within the term of the employment contract.

Based on this, the Court of Appeal dismissed the company’s appeal, and upheld the judgment of the court of first instance.

(Source: http://bjgy.chinacourt.org)

KWM comments: The Court of Appeal held that even if employees are absent from work, as overtime pay equals two or three times of the normal daily salary for working days, deducted wages due to absences cannot offset overtime wages. Given the above, employers should timely arrange employees to take make-up rest or pay them overtime pay after the overtime work occurs. Employers may also specify in their internal regulations that the employees’ absence will be deemed as the make-up rest for overtime, in order to reduce relevant legal risks.