For time-paid workers, overtime on the actual hourly wage is familiar. For piece-rate workers — common in garments, footwear and electronics — the calculation is entirely different and a simmering source of disputes in many factories: the employer pays the normal piece rate for output made in overtime hours too. This article states the correct formula under Decree 145/2020/ND-CP and how disputes are handled when the employer has undercalculated.
The correct formula: rate times output times the day coefficient
Article 98 of the Labour Code sets the overtime pay principle, and Article 55 of Decree 145/2020/ND-CP specifies it for piece-rate workers: overtime pay equals the piece-rate wage unit price of a normal working day, multiplied by the quantity of products made during overtime hours, multiplied by the coefficient for the day type. The coefficient is 150% for overtime on a normal day, 200% on the weekly rest day, and 300% on public holidays and paid leave days. The core point is that output made in overtime hours is paid at the coefficient-multiplied rate, not the normal rate.
The two most common undercalculation errors in factories are paying the whole day’s output at a single rate without separating the overtime-hours portion, and using a diluted piece rate when applying the coefficient. In addition, where the employee works overtime at night, the night-work wage and the night-overtime supplement are added under the corresponding rules. On a public holiday, the employee also keeps the full paid-holiday wage under the paid leave rules on top of the 300% overtime piece pay; the two do not cancel each other out.
Why employers calculate in their own favour
Part of the cause is that factory output systems usually record total output per shift without splitting the moment normal hours turn into overtime, leaving HR without the data to calculate correctly even when it wants to. Another part is that piece rates in many factories are built on norms embedding an assumption about overtime productivity, and the employer considers the overtime coefficient already inside the rate — an understanding inconsistent with the statutory formula, because Article 55 requires the coefficient to be applied distinctly on top of the normal-day piece rate.
When labour inspectors or worker representatives reconcile payroll against output records and timekeeping, this blended calculation is detected fairly easily because the three data sources disagree: output spikes in the last hours of the shift while pay does not rise correspondingly. The employer faces back-payment of the shortfall for all affected workers and the whole period the wrong method was applied, plus sanctions for incorrect wage payment.
How workers claim the shortfall
A piece-rate overtime dispute is an individual labour dispute which, in principle, must pass through a labour mediator before a court claim, save statutory exceptions allowing direct suit. In mediation and in court, the central evidence is a data trio: timekeeping records of overtime hours, output data by shift or by hour, and the actual payroll. Workers should collect personal output slips and photographs of the relevant pay tables as soon as an undercalculation is spotted, because detailed output data usually lives only on the factory’s internal systems.
To quantify the back-payment claim, the worker or their legal supporter must rebuild each pay period: separate the output made in overtime hours by day type, apply the normal-day rate times 150%, 200% or 300% respectively, and deduct what the employer already paid for that output. The limitation for individual labour dispute requests is 01 year from discovering the infringing act, so older pay periods should be handled early rather than accumulated over years. Employers receiving a claim quantified this clearly usually choose negotiated back-payment over mediation and an expanded inspection.
Frequently Asked Questions
What is the formula for piece-rate overtime pay?
Under Article 55 of Decree 145/2020/ND-CP: take the piece-rate wage unit price of a normal working day, multiply by the quantity of products made during overtime hours, then multiply by 150% for a normal day, 200% for the weekly rest day, or 300% for public holidays and paid leave days. Output made in overtime hours may not be paid at the normal rate.
Is it lawful for the company to pay the normal piece rate for overtime output?
No. That method omits the overtime coefficient required by Article 98 of the Labour Code and Article 55 of Decree 145/2020/ND-CP. The argument that the coefficient is already embedded in the norm rate does not match the statutory formula, which applies the coefficient distinctly on the normal-day rate. The shortfall can be back-paid for the entire period the method was applied.
For overtime on a public holiday, what applies besides the 300% coefficient?
The employee keeps the full public-holiday wage under the paid leave rules, plus overtime piece pay at the 300% coefficient on the normal-day rate for output made in that day’s overtime hours. The two are independent and do not offset each other. Night overtime adds the night-work wage and night-overtime supplement under their own rules.
What evidence is needed to claim underpaid overtime?
A trio: timekeeping or overtime-hour data, personal output data by shift or by hour, and the actual payroll for the relevant periods. Individual labour disputes in principle go through a labour mediator before court. The request limitation is 01 year from discovering the violation, so older periods should be raised early.
Practical recommendations
HR in a piece-rate factory should split output data at the moment normal hours turn into overtime right inside the production management system, and print overtime pay as its own payroll line. When the Article 55 formula runs automatically in the system, piece-rate overtime disputes nearly disappear; when it is blended by hand at month-end, deviation is only a matter of time.
This article has been quality-reviewed by the FLAW AI Legal Council