Occasionally, companies ask their employees to work overtime to handle an increased workload and meet urgent deadlines. This enables them to meet productivity targets, while also providing employees the opportunity to earn additional income.
Previously, we’ve talked about regular or normal working hours in Taiwan, as stipulated in the Labor Standards Act (LSA). In this article, we will be focusing on work performed during overtime hours, and how employees’ overtime pay is calculated.
Overtime Pay as a Foreign Worker in Taiwan
Before looking into how overtime pay is calculated, let us first define what “overtime” is, and how many hours of overtime are allowed for foreign workers in Taiwan.
What is “Overtime”?
According to the Labor Standards Act (LSA), the regular working hours are 8 hours per day, and 40 days per week. Any work that is rendered beyond these limits is considered as “overtime.”
Employees are allowed to work for a maximum of 12 hours a day, including overtime. The total amount of overtime should not be more than 36 hours within a month. However, this may be increased to 54 hours a month, and 138 hours within three months — provided that there is prior consent from the labor unions or labor-management conferences.
Moreover, if the company has 30 or more employees, it is required to report work hour extensions or overtime to the local authorities.
Calculating Overtime Pay
With regards to overtime pay, this is calculated based on the employee’s regular hourly wage and the number of overtime hours served. We can estimate this by dividing the employee’s monthly salary by 30 days, and then dividing this by 8 hours.
For example, if a worker’s monthly salary is TWD 50,400, his daily and hourly wages are computed as TWD 1,680 and TWD 210, respectively.
First Two Hours
For the first two hours of overtime, the overtime pay rate should be at least 1.33 times the regular hourly wage. So based on the above example, the worker’s overtime pay rate is calculated as TWD 210 x 1.33 = TWD 279.30 per hour.
Three or More Hours
If the employee’s overtime hours are longer (i.e. three hours or more), the overtime pay rate should be at least 1.66 times the regular hourly wage. In our example, the worker’s overtime pay rate is calculated as TWD 210 x 1.66 = TWD 348.60 per hour for the third hour and beyond.
Public Holidays
When the employee is asked to work on a public holiday, his wage for that day should be double the regular rate. The same goes for rest days/leave days when he is asked to work because of an accident, emergency or a natural disaster.
Important Reminders
When it comes to working hours and overtime, both employers and employees should take note of these reminders:
- Records of Working Hours. Employers should have an accurate record of each employee’s working hours, including regular and overtime hours. They must maintain and keep these records for at least five years, to help resolve any compensation issues.
- Overtime Pay Calculation. The worker’s overtime pay must be calculated correctly; otherwise, incorrect calculation could lead to penalties and legal disputes for employers.
- Proper Compensation. Employers should pay overtime compensation. Refusal to do so could lead to legal disputes and penalties.
As employees, we should know and understand how overtime pay is calculated. This way, we can assert our rights in case the computation is incorrect or if the employer refuses to pay overtime. Likewise, we should also be aware of these common contract violations that are committed against foreign workers.