1、 Case details

Employee A is a senior executive of Company A in Shanghai. The labor contract signed by both parties stipulates that A's annual salary is RMB 750000, and the position where A works has been approved to implement a flexible working schedule. In July 2025, Mr. A requested that Company A pay overtime wages on the grounds that he worked overtime on statutory holidays.

2、 Focus analysis

(1) Under the flexible working hours system, should employers pay overtime wages to employees who are arranged to work on statutory holidays?

According to the "Shanghai Enterprise Wage Payment Measures", for workers who have been approved by the human resources and social security administrative department to implement flexible working hours, if the enterprise arranges work during statutory holidays, overtime pay shall be paid in accordance with the provisions of item (3) of this article. According to this regulation, if an employer in Shanghai arranges employees who implement flexible working hours to work overtime on statutory holidays, they should be paid overtime pay. Shenzhen holds the same view. Beijing, Tianjin, and Guangdong have stipulated that overtime pay is not required.

(2) Under the annual salary system, is it still necessary to pay overtime pay to employees, that is, does the annual salary naturally include overtime pay?

Overtime pay is a form of compensation for workers who work overtime. According to the Labor Contract Law, if an employer arranges overtime, they shall pay overtime pay to the workers in accordance with relevant national regulations. The principle is that the annual salary of employees under the previous year's salary system does not necessarily include overtime pay. Whether overtime pay is included needs to be clearly agreed upon by both parties. If there is no clear agreement and there is overtime work, overtime pay should still be paid in accordance with the law. In some regions such as Huizhou, Jiangmen, Meizhou, and Zhongshan, there are exceptions, which stipulate that for senior management and technical personnel of enterprises who have already agreed on higher salaries with employers, as well as workers who have difficulty measuring working hours and labor remuneration with standard working hours and have agreed to implement a higher annual salary system with employers, their claims for overtime pay are generally not supported.

If Party A and Company A only agree on the annual salary amount in the labor contract, without specifying the composition of the annual salary and including overtime pay, and Party A also has overtime work, Company A should still pay overtime pay to Party A.

3、 Case Insights

For executives who implement both flexible working hours and annual salary systems, whether overtime pay needs to be paid separately depends on the following factors:

1. The regulations on the payment of overtime wages under flexible working hours in the place of performance of the labor contract;

2. Does the labor contract or other written document stipulate the composition of annual salary, including overtime pay?

3. Whether the overtime work of the employee has gone through the approval process stipulated by the employer, that is, whether there is a fact of overtime work.

4、 Conclusion

For executives who implement flexible working hours and annual salary systems, considering their characteristics of flexible working hours and high salaries, if the salary formulated by the employer can cover possible overtime pay, it should be clearly stipulated in the labor contract that the annual salary includes overtime pay and the composition of annual salary should be clarified. At the same time, a supporting overtime approval system should be established to avoid disputes caused by overtime pay.