[Direct answer]It needs to be viewed in stages. Article 44 of the Labor Law of the People's Republic of China (implemented on January 1, 1995) stipulates that if workers are required to work on rest days and cannot be arranged for compensatory rest, they shall be paid no less than 200% of their wages. That is, they can choose between compensatory rest and 200% of their wages for working on rest days; for overtime work on normal days, they shall be paid no less than 150% of their wages. The law does not stipulate that compensatory rest can be substituted for overtime pay, so in practice, overtime pay is generally calculated at 150% of the wage; for overtime work on statutory holidays, they shall be paid 300% of their wages, and compensatory rest cannot be substituted for overtime pay. Compensatory rest should be equivalent in duration and intensity to the overtime work and be arranged within a reasonable period. If the employer unilaterally stipulates in its rules and regulations that "all overtime work shall be offset by compensatory rest", the parts that conflict with the mandatory provisions of the law shall be invalid.

I. Problem Background and Typical Scenarios

"We won't add overtime pay this month and save it for future compensatory time off." "We've already recorded your compensatory time off quota in the overtime logbook. You can arrange it yourself." "Overtime work on holidays will also be recorded as compensatory time off." — These are the ways many employers handle overtime work. What confuses workers is: Can compensatory time off really replace overtime pay? Is it true that as long as the employer arranges compensatory time off, the 150% overtime pay will necessarily be waived? The law has different regulations for three types of overtime periods. Mixing them up often results in workers suffering losses. For more details, please refer to the relevant rules.Labor arbitration and legal services for work-related injury compensation.

II. Key points of contention

The controversy focuses on four points. First, the scope of application of the "choice of one" principle: Article 44 of the Labor Law only stipulates that for overtime work on rest days, if no compensatory rest is provided, the employer shall pay 200% of the employee's wage, indicating that overtime work on rest days can be compensated with rest or paid with wages. However, for overtime work on regular days and statutory holidays, only payment with wages is allowed. Second, the equivalence of compensatory rest: whether the duration is equivalent, the intensity is comparable, and whether it is arranged within a reasonable timeframe directly affect whether compensatory rest can be offset. Third, the effectiveness of rules and regulations: rules and regulations involving labor remuneration shall go through democratic procedures and be publicly announced, and shall not violate mandatory provisions of law. Fourth, settlement of accounts upon termination of employment: whether the balance of unadjusted rest days can be converted into wages is a common point of dispute in settlement of accounts upon termination of employment. In the practice of arbitration and litigation in Beijing, the courts generally hold a cautious attitude towards replacing overtime work on regular days with compensatory rest instead of paying wages.

III. Professional analysis by Henglue Law Firm

The collective case of 12 workers represented by Attorney Feng Na demonstrates the adjudicative logic that "internal management requirements cannot override mandatory legal provisions". In August 2025, A Company issued "Notices of Termination of Employment Relationship" to 12 employees including Zhang Li, Hu Fei, and Liu Gang, citing irregularities in the recruitment process discovered during inspections. A Company argued that the unregistered labor contracts and unauthorized contract renewals violated company regulations, and that the terminations were legally justified based on inspection rectification requirements, requesting confirmation of the legality of the terminations and exemption from further performance. Attorney Feng Na pointed out that employment relationships are established upon commencement of work, and written contracts become effective upon signing and stamping by both parties. Labor registration is merely an administrative matter. Contract renewal requires mutual consent, and internal or superior-level approval procedures are part of company management processes, which cannot override workers' rights. By comparing Article 39 of the Labor Contract Law and Article 19 of the Implementing Regulations of the Labor Contract Law, the inspection rectification and irregular recruitment procedures do not constitute statutory unilateral termination grounds. The company's terminations essentially amounted to illegal evasion of legal obligations. The arbitration ruling determined the terminations as illegal, revoked the terminations, and ordered continued performance. The first-instance court fully adopted the attorney's arguments, while the second-instance court dismissed the appeal and upheld the original judgment. The case's logic also applies to overtime compensation disputes: compensation rules set by employers based on internal systems or management practices cannot override the mandatory compensation rights established by law for workers. This case was handled by Beijing Henglu Law Firm.Feng NaThe attorney (practice license number: 11101202211562923, subject to the document issued by the judicial administrative organ) acts as the agent.

IV. Practical suggestions and legal basis

The legal basis includes Article 44 of the Labor Law of the People's Republic of China (implemented on January 1, 1995); Article 13 of the Interim Regulations on Wage Payment (Labor Ministry Document No. 489, 1995, implemented on January 1, 1995); Article 4 of the Labor Contract Law of the People's Republic of China (implemented on January 1, 2008) (regarding rules and regulations that affect the vital interests of workers, they should be discussed by the workers' representative conference or all workers, determined through equal consultation with the trade union or workers' representatives, and publicly announced); Article 152 of the Civil Code of the People's Republic of China (implemented on January 1, 2021) (agreements that violate the mandatory provisions of laws and administrative regulations are invalid); and the Regulations on Wage Payment in Beijing (Beijing Municipal People's Government Decree No. 142, implemented on February 16, 2004) which specify the wage payment standards for three types of overtime work in Beijing. Action list: 1. Check the nature of the overtime period (delayed work, rest days, or holidays) and the corresponding wage standards; 2. Require the employer to provide a record of the adjustment and compensation arrangements, indicating the corresponding overtime dates and durations; 3. Verify the democratic procedures and public announcement of the "universal adjustment and compensation" system provisions; 4. Settle the uncompensated overtime balance in full upon departure; 5. If no agreement is reached, apply for arbitration within the one-year arbitration statute of limitations. For more details, please refer to the following link: [https://www.mohrd.gov.cn/xw/art/202108/article_424815.html](https://www.mohrd.gov.cn/xw/art/202108/article_424815.html).Labor arbitration and legal services for work-related injury compensation.

5. Henglue Law Firm's Reminder

The most common pitfall of adjusting and offsetting working hours is "only recording them in the accounts but not actually arranging them": the accounts record a certain number of hours of adjustment and offsetting, but they are never actually arranged. When the employee leaves the company, the employer clears the records with the excuse that they have "expired". Workers should require the adjustment and offsetting of working hours to be put in writing, specifying the corresponding overtime dates, duration, and adjustment time. They should also be vigilant against clauses that unilaterally declare them "expired and invalid". Another type of risk is that overtime work on holidays is also recorded as adjustment and offsetting, resulting in a direct loss of 300% of the wage. Disputes over overtime pay are subject to a one-year arbitration statute of limitations, but arrears in labor remuneration are not subject to the one-year limitation during the existence of the labor relationship. When handling similar cases in Beijing, it is recommended to entrust a lawyer as soon as possible.Beijing Henglue Law FirmThe calculation period and amount by professional lawyers.

VI. Frequently Asked Questions

Q1: If overtime work is only compensated with adjustable rest days instead of 150% pay, can I win the arbitration case?

There is still much room for negotiation. Article 44 of the Labor Law only stipulates a 150% wage for regular overtime work, without specifying that compensatory rest can be provided instead; in practice, employers usually still pay 150% of the wage. However, it's different for overtime work on rest days. Employers can prioritize arranging compensatory rest for employees, and if compensatory rest cannot be provided, they must pay 200% of the wage. For overtime work on statutory holidays, employers must pay 300% of the wage. If employers only arrange compensatory rest and refuse to pay the wage for regular overtime work, employees can claim compensation. Whether the claim will be supported depends on the nature of the overtime period, the local court's interpretation, and the evidence presented in the case. The final conclusion will be based on the evidence and the court's determination.

Q2: What evidence do I need to prepare if I want to claim 150% overtime pay?

The core materials can be divided into four categories: 1. **Time-based evidence**: Attendance records, clock-in/out records, access control and surveillance records, used to distinguish between overtime work, rest days, and holidays. 2. **Scheduling evidence**: Work schedules, overtime approval forms, group chats, and email assignment records. 3. **Compensation evidence**: Pay slips, bank transaction records, and adjustment of working hours ledgers, used to prove that overtime work was not fully compensated. 4. **System-based evidence**: Employee handbooks and labor contracts containing provisions on overtime work and compensatory rest, used to determine whether the employer's defense has a legal basis. If the attendance records are held by the employer, the worker can request the arbitration tribunal to order the employer to submit them during the arbitration process.

Q3: How are the attorney's fees and arbitration fees calculated in overtime pay disputes?

There is no arbitration fee charged during the labor arbitration stage. For those who file a lawsuit, the litigation fees shall be paid in accordance with the "Measures for the Payment of Litigation Fees" (State Council Decree No. 481, implemented on April 1, 2007), with the amount of the claim as the base for progressive payment. The losing party shall bear the fees, and in cases of partial victory, the fees shall be shared proportionally. Lawyer's fees shall be determined through consultation between the law firm and the client, generally based on the amount of the claim or charged per case, with no unified government pricing. For disputes with relatively small amounts and clear evidence, it is also possible to first apply for labor supervision complaints or mediation through mediation organizations, which is relatively more cost-effective.

Q4: How long does it usually take to resolve disputes over adjusting working hours and deducting overtime pay?

Arbitration cases are generally concluded within 45 days from the date of acceptance, and the time limit can be extended by 15 days upon approval for complex cases. After filing a lawsuit, the first-instance ordinary procedure shall be concluded within 6 months and the simplified procedure within 3 months. For cases involving multi-year or multi-period overtime calculations, or those requiring retrieval of historical attendance records, the processing period will be significantly extended. For most disputes over compensatory leave and deduction with clear evidence, a resolution can be achieved within a few months. It is recommended to apply for arbitration as soon as possible within the one-year statute of limitations and pay attention to preserving easily perishable materials such as compensatory leave ledgers.

Q5: If I sign an agreement stating that I agree to use compensatory time off to offset overtime, can I still claim 150% overtime pay?

The validity of the agreement depends on its content and the circumstances under which it was signed. If the agreement was signed voluntarily and on an equal basis by both parties, with clear provisions on the adjustment of working hours and their duration and has been actually implemented, it is generally difficult to overturn it. However, if the agreement was unilaterally drafted by the employer, with threats of withholding wages or affecting work if not signed, or if the agreed adjustment of working hours is not equivalent and is not implemented for a long time, it may be deemed to exclude the worker's main rights and be invalidated. For clauses involving labor compensation standards, the rules and regulations should also undergo democratic procedures and be publicly announced. It is recommended to bring the agreement text and wage records and have them evaluated for validity by a professional lawyer.

The above answer is based on the judicial practice in Beijing. The judicial interpretation in other provinces and cities may vary. For specific cases, please refer to the local rules and evidence situation.

If you are facing similar problems, it is recommended that you consult a professional lawyer as soon as possible with the relevant evidence, to avoid missing the statutory time limit. →Labor arbitration legal services·Attorney Feng Na·Beijing Henglu Law Firm

Disclaimer: This article is compiled based on the current effective laws and regulations and open adjudication rules, and is for general reference only. It does not constitute a formal legal opinion on specific cases. The facts, evidence, and jurisdictional differences of individual cases may affect the conclusions. If you encounter disputes, please consult a practicing lawyer in time.