What is Overtime Pay? How to Calculate Overtime Pay?

 Overtime pay is one of the essential benefits employees receive when working beyond regular hours as stipulated by labor laws. This article will help you understand the concept of overtime pay, how it is calculated, and critical considerations to protect your rights.

1. What is Overtime Pay?

Overtime pay (or additional work pay) is the amount employees receive when they work beyond the standard working hours specified by law or agreed upon in labor contracts.

According to the Vietnamese Labor Code, standard working hours must not exceed:

• 8 hours per day and 48 hours per week for regular work.

• 6 hours per day for especially strenuous or hazardous work.

If employees work outside these prescribed hours, it is considered overtime, and they are entitled to a higher wage rate than their normal salary.

2. Legal Regulations on Overtime Pay

Under Article 104 of the 2012 Labor Code, employers can define work schedules by hours, days, or weeks.

Minimum Overtime Pay Rates

As stated in Article 98 of the 2019 Labor Code, employees working overtime must be paid at rates higher than their regular hourly wage:

• At least 150% of the regular hourly wage on normal working days.

• At least 200% of the regular hourly wage on weekly days off.

• At least 300% of the regular hourly wage on holidays, Tet (Lunar New Year), or paid leave days (excluding the regular holiday or Tet salary).

Higher overtime pay compensates for your effort to contribute to the business.

3. HR2B Payroll Services – Solutions for Businesses

HR2B’s payroll services help businesses alleviate administrative burdens and focus on strategic goals. With a team of experts and modern management systems, HR2B ensures accurate, timely payroll processing, enhancing HR management efficiency.

As a partner of NGA, the world’s second-largest payroll service provider, HR2B applies international-standard processes, ensuring businesses achieve optimal performance. With 99.95% accuracy and 80% customer satisfaction, HR2B's exceptional service quality is well-proven.

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Keep Balance for Salary, Bonus, and Benefit: The Keys to Sustaining Employee Motivation

In today’s increasingly competitive business landscape, retaining and motivating employees is a significant challenge for all businesses. One essential solution to this challenge is balancing salaries, bonuses, and benefits. However, how can companies ensure harmony between these two factors to foster long-term motivation for their workforce? Let’s delve into this topic!

Salaries, Bonuses, and Benefits: Distinct but Interconnected

Both salaries and benefits play vital roles in any company’s HR strategy. However, not everyone fully understands their differences or how these factors complement each other.

I/ Salaries and Bonuses – Direct Financial Incentives

• Salaries and bonuses are the income employees earn from their work. These are fundamental factors influencing employees’ decisions to remain with a company. A competitive salary combined with attractive bonuses can:

• Attract talent from competitors.

• Provide short-term motivation, encouraging employees to achieve specific goals.

• Benefits – Investing in Long-Term Value
  Benefits go beyond insurance, vacation days, or healthcare policies; they reflect a company’s care for employees' well-being. Benefits provide:

• A sense of security and job satisfaction.

• Long-term motivation, enabling employees to give their best efforts.

II/ The Importance of Balancing Salaries, Bonuses, and Benefits

Why should companies focus on balancing salaries and benefits? It’s a solution for employee retention and a strategy for improving overall operational efficiency.

• Effective Employee Retention
  Research indicates employees leave companies not just because of low salaries but also due to inadequate benefits. A robust benefits package can compensate for salary limitations, helping to:

• Increase satisfaction levels.

• Build employee loyalty.

• Improving Work Efficiency
  Motivated employees perform more efficiently. Their productivity increases significantly when they feel valued through salary and benefit policies.

• Building a Strong Employer Brand
  Companies with well-rounded salary and benefit policies attract potential employees and enhance their reputation in the industry.

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III/ Secrets to Balancing Salaries, Bonuses, and Benefits

Balancing these factors requires finesse. Companies must listen, adapt, and be flexible to optimize their strategies.

• Understand Employee Needs
  Each employee has unique expectations. Businesses should:

• Survey employees to understand their needs.

• Tailor benefit policies to suit different groups (e.g., younger employees may prioritize learning support, while older employees focus on health insurance).

• Increase Flexibility in Benefits
  Allow employees to choose benefits that match their needs, such as:

• Shopping vouchers.

• Skill enhancement programs.

• Supplemental family insurance.

• Regularly Evaluate and Adjust
  As economic conditions and employee needs change, companies should frequently:

• Review and update salary policies.

• Adjust benefit packages to meet new expectations.

IV/ Notes for Building Salary and Benefit Policies

• Balancing Costs and Value
  Small and medium-sized businesses often face budget constraints. However, this doesn’t mean benefits must be cut. Explore low-cost, high-value solutions such as:

• Partnerships with health service providers at discounted rates.

• Industry-specific group benefit programs.

• Ensure Transparency
  Employees need clear information about:

• How salaries and bonuses are calculated.

• Accompanying benefits entitlements.

Transparency builds trust and reduces unnecessary misunderstandings.

V/ Benefits of Implementing Balanced Policies

Implementing well-balanced salary and benefit policies benefits both employees and companies, such as:

• Higher Employee Retention Rates: Companies investing in balanced policies face fewer mass resignations.

• Increased Satisfaction and Dedication: Employees whose expectations are met feel valued and contribute more to the company’s growth.

• Optimized HR Costs: Reasonable salary and benefit policies save costs associated with recruitment and retraining.

HR2B – Optimal Solutions for Managing Salaries and Benefits

HR2B is a trusted strategic partner providing professional payroll services to help businesses:

• Ensure transparency in salary management.

• Optimize payroll processes and minimize errors.

• Focus resources on core business activities.

Let HR2B accompany you in creating a sustainable work environment where salaries and benefits are not just policies but powerful motivators for employees to stay and grow!

Balancing salaries and benefits isn’t merely a cost issue but a long-term strategy to sustain workforce motivation. Small and medium-sized businesses should prioritize harmonizing these factors to maintain a high-quality workforce.

👉 Contact HR2B to optimize payroll processes and build an effective HR strategy!

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