You suspect your company has miscalculated your overtime pay but don’t know the legal basis or the correct formula to verify? In this article, KMC provides you with four formulas for calculating overtime pay based on specific scenarios so you can check it yourself.
Standard Formula for Overtime Pay (Updated 2025)
Calculating overtime pay in accordance with regulations not only helps businesses comply with the law but also ensures employee rights. Below are the overtime pay formulas according to Decree 145/2020/NĐ-CP and Article 98 of the 2019 Labor Code, applicable for 2025.
How to Calculate Overtime Pay (For Hourly Wages)
Basic formula:
Overtime pay = actual hourly wage × 150%, 200%, or 300% × overtime hours.
In which:
- Actual hourly wage = monthly salary (excluding allowances, bonuses, or previous overtime pay) divided by the total number of working hours in a month (typically 26 days × 8 hours = 208 hours, depending on company policy).
Example: With a monthly salary of VND 7,800,000 and a standard work schedule of 26 days, your actual hourly wage is 7,800,000 ÷ 208 = VND 37,500/hour.
Overtime pay rate:
- Weekdays: at least 150%
- Weekly rest days: at least 200%
- Holidays and Tet: at least 300% (excluding regular holiday pay)
Overtime hours: total hours worked outside of official working hours.
Illustrative example:
Mr. Hoang earns a monthly salary of VND 7,800,000 and works 4 extra hours on a weekday. His actual hourly wage is VND 37,500/hour.
Overtime pay = 37,500 × 150% × 4 = VND 225,000
How to Calculate Overtime Pay (For Piecework Pay)
Basic formula:
Overtime pay = unit price per product × 150%, 200%, or 300% × number of overtime products
In which:
- Unit price per product is the pay rate for each product completed during regular work hours.
- Overtime pay rate:
- Weekdays: at least 150%
- Weekly rest days: at least 200%
- Holidays and Tet: at least 300%
- Overtime products: number of products completed during overtime.
Illustrative example:
Ms. Lan produces goods at a unit price of VND 10,000/product. She works overtime and completes 20 products on a weekly rest day.
Overtime pay = 10,000 × 200% × 20 = VND 400,000.
How to Calculate Night Overtime Pay (For Hourly Wages)
Basic formula:
Night overtime pay = (actual hourly wage × 150%, 200%, or 300%) + (actual hourly wage × 30%) + (20% × daytime hourly wage) × number of night overtime hours
In which:
- Actual hourly wage: monthly salary ÷ total monthly work hours (typically 208 hours)
- 150% / 200% / 300%: rate for weekday, weekend, or holiday/Tet overtime respectively
- 30%: night work allowance
- 20% of daytime hourly wage: extra allowance for working overtime at night
- Daytime hourly wage = 100% (weekday), 150% (overtime), 200% (weekend), 300% (holiday)
Night overtime hours: working between 10:00 PM to 6:00 AM
Illustrative example:
Mr. Hoang works 6 night overtime hours on a weekday. His hourly wage is VND 37,500/hour.
Overtime pay = (37,500 × 150%) + (37,500 × 30%) + (20% × 37,500 × 150%) × 6 = VND 472,500.
How to Calculate Night Overtime Pay (For Piecework Pay)
Formula:
Night overtime pay = (unit price × 150%, 200%, or 300%) + (unit price × 30%) + (20% × daytime unit price) × number of night overtime products
In which:
- Unit price: pay for each product completed during regular hours
- 150% / 200% / 300%: rate for weekday, weekend, or holiday/Tet overtime respectively
- 30%: night work allowance
- 20% of daytime unit price: extra allowance
- Daytime unit price = 100% (weekday), 150% (overtime), 200% (weekend), 300% (holiday)
Night overtime products: products completed from 10:00 PM to 6:00 AM
Illustrative example:
Ms. Lan works overtime at night on a weekday and completes 10 products. Unit price: VND 10,000/product.
Overtime pay = (10,000 × 150%) + (10,000 × 30%) + (20% × 10,000 × 150%) × 10 = VND 210,000.
Important Notes:
Businesses must agree on a standard number of working days (typically 26 days/month) in their internal rules. For short months (e.g., February), the standard remains unless otherwise directed by the authorities.
Common Mistakes in Overtime Calculation and How to Fix Them
Exceeding Legal Overtime Limits
Mistake:
Some businesses require employees to work overtime beyond legal limits.
Solution:
According to Article 107 of the 2019 Labor Code, businesses must:
- Ensure total working time (including overtime) does not exceed 12 hours/day.
- Limit overtime to 40 hours/month and 200 hours/year (or 300 hours/year for specific industries like textiles, footwear, electronics, or in emergency cases).
Incorrect Personal Income Tax (PIT) Calculation
Mistake:
Some businesses calculate PIT on the full overtime amount, while the excess amount above regular hourly wages is tax-exempt.
Solution:
According to Circular 111/2013/TT-BTC, the portion of overtime pay exceeding regular hourly pay is PIT-exempt.
Thus, businesses must separate the overtime differential from the regular pay portion.
Example:
If regular pay = VND 50,000/hour, overtime = VND 80,000/hour → VND 30,000/hour is PIT-exempt.
Unclear Overtime Calculation Process
Mistake:
Some businesses do not disclose their overtime calculation methods or explain them clearly, leading to misunderstandings or disputes.
Solution:
Companies should include the overtime calculation process in internal regulations and labor contracts.
To enhance clarity, provide detailed payslips that show regular and overtime pay calculations and deductions.
Regular employee meetings can help address concerns and keep everyone updated on new regulations.
We’ve listed very specific overtime calculation formulas for hourly, piecework, and night work. However, if your business has complex allowances or uses shift-based overtime pay, KMC—with 17 years of consulting experience for FDI companies in Vietnam—can help you design a legally compliant payroll framework.
