Court ends “996” and marks a shift in China’s overtime work culture

The “996 work culture” in China, a practice where employees work from 9am to 9pm six days a week, will no longer be accepted. The country’s supreme court ruled it as illegal, ending the excessive working hours.
 

In a statement issued on August 26, 2021, the Supreme People’s Court (SPC) and Ministry of Human Resources and Social Security (MOHRSS) detailed 10 court decisions related to labor disputes, many involving workers being forced to work overtime.
 

“Legally, workers have the right to corresponding compensation and rest times or holidays. Complying with national working hours is the obligation of employers. Further guidelines will be developed to resolve future labor disputes,” the statement said.

According to China’s labor laws, a standard workday is eight hours with a maximum of 40 hours a week. Any work beyond that requires extra pay for overtime, and monthly overtime totals are limited to 36 hours.
 

However, many of the country’s companies have not enforced this ruling and employees often work longer hours and are not always compensated.
 

In one case, a worker at a parcel delivery company was fired after refusing to work overtime under the company’s “996” policy. The worker applied for labor dispute arbitration and the arbitration committee ordered the company to compensate the worker RMB 8,000 (US$1238).
 

In another cases, a young woman died after working consecutive long shifts and another worker committed suicide. Both worked for the Chinese e-commerce platform Pinduoduo. After their deaths, the firm’s employees came forward to say they regularly worked more than 300 hours each month.
 

In another example, a worker named Li was dispatched by a service company to work at an unidentified media company. Li was regularly working for more than 300 hours per month and took no more than three days off monthly. On December 1, 2020, Li fainted in a bathroom at work and died of a heart attack as he neared the end of a 12-hour overnight shift. Li’s employers did not buy injury insurance for him.
 

In its ruling, the court affirmed that both the service company and the media company were responsible for Li’s death and ordered the two companies to compensate Li’s families RMB 766,911.55 (US$118,671).
 

While the court acknowledged the intense competition that drives Chinese companies to maximize profits and cut labor costs, it said the extreme overtime harms workers’ physical and mental health, their family life and their ability to pursue a social life.
 

The court’s decision and guidelines represent a significant shift on China’s overtime work culture, especially in the tech industry.
 

The “996” practice has been the subject of heated debates, in particular since 2018, when Alibaba’s Jack Ma called it a “blessing”.   
 

Lately, Chinese authorities are paying more attention to labor rights and exercising more control on the market. Last June, Siemens Numerical Control Ltd. was fined by the local government in Nanjing for violating regulations on working hours.
 

Slowly, some of China’s tech giants have been improving working conditions.  Smartphone maker Vivo has become one of the bigger companies to take the lead in changing the overworking culture, announcing it would scrap its “big week/small week” practice, where workers alternate five and six-day working weeks.
 

Popular short-video apps Douyin (Chinese Tiktok) and Kuaishou have scrapped the “big week/small week” policy as well.

The Tencent-backed gaming studio Lightspeed & Quantum Studios, responsible for popular games such as Game for Peace (Chinese version of PUBG), decided to allow its employees to leave the office at 6pm on Wednesdays and no later than 9pm on other weekdays.
 

But not all employees are in favor of this culture change. Some feel the need to hit key performance indicators (KPIs) or are eager for more overtime pay.
 

Unlike formal employees who can rely on labor arbitration and supervision to defend their rights, millions of gig workers, such as couriers and food delivery riders, not always can protect their rights.

 

In January, a food deliveryman for the Alibaba-owned takeout platform Ele.me set himself on fire because of a pay dispute. This, and other similar events, have caused the public to question the system and demand change.
 

In response, Chinese regulators announced a series of policies to encourage tech companies to evaluate and protect gig workers’ rights.
 

On July 27, seven authorities, including the State Administration of Market Regulatory (SAMR), published guidelines, calling for online food delivery platforms to optimize remuneration rules and establish a reasonable working time mechanism for food delivery persons.
 

On July 22, eight authorities issued a guideline for protecting the rights and interest of workers in “new forms of employment”, such as couriers, food delivery riders, and ride-hailing drivers.
 

On June 23, seven authorities, including the Ministry of Transport, announced an opinion concerning the rights and interests of couriers. The opinion encourages courier companies to hire workers directly and pay injury insurance for employees in proportion to the average local salary or turnover.
 

According to Chinese law, an employee’s workday should not be more than eight hours and an average work week should not exceed 40 hours, which equates to a five-day work week.
 

Workers are entitled to at least one rest day per week and longer working hours are subject to established overtime rates. Most white-collar work falls under this category.

 

The comprehensive work hour system accumulates work hours over a specified period (weekly, monthly, quarterly, or yearly). The average number of hours is then calculated based on this accumulation period. In general, this system is most suited to work roles with irregular shifts.
 

Overtime is applicable for hours worked above the standard set per cycle. Such rates match those of the standard work hour system for extra hours worked and work on public holidays. However, no rest day is outlined under this system. Before a company can implement this system, it must first submit its plan to the local labor bureau for approval.
 

The flexible hour system accommodates employees whose working hours are difficult to measure. Employees on such a schedule will generally be paid as a salaried employee. This salary is a fixed amount paid per period, often monthly.
 

No overtime cost is associated with the non-fixed work hour system. While employers are required to observe appropriate work and rest schedules, it is up to the employer’s discretion. This system also requires prior approval of the local labor bureau.
 

Companies should pay close attention to China’s changing labor system. New regulations and guidelines may have a direct impact on employment policies, recruitment, organizational restructuring, and specific business promotion arrangements.


To learn more about our services in China, contact our Head of Business Advisory - Ms. Kristina Koehler-Coluccia at kristina@woodburnglobal.com.

DISCLAIMER: All information in this article is verified to the best of our ability and is assumed to be correct at time of release; however, Woodburn Accountants & Advisors does not accept responsibility for any losses arising from reliance on the information provided within. The information provided is for general guidance and does not replace specialized advice.