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Bakery and Confectionery: Excessive Overtime Hours and Hour Averaging

Provided by IFC Sustainable Business Advisory


Bakery and Confectionery Facility, China

Case

A baking facility in China employs 50 workers in a one-shift operation. The facility supplies local markets and there is typically a 20-30 percent fluctuation in demand for certain holi­days and seasons. Supplies of flour, milk and eggs are usually delivered once a week and stored at the facility. Sometimes there are delays from the suppliers, so the facility cannot run at full capacity and the workers do not work their full shifts. The facility compensates for the lost production by having the workers work extra hours in the late evening once supplies become available. In addition, due to the short shelf-life of supplies, the facility often runs its operations past normal working hours to prevent waste. The extra working hours are then averaged over the month so the workers do not receive overtime premium pay.

Impact

Non-payment of overtime work at premium rate

Avoid 

  • Develop organization’s policy on remuneration and working hours; communicate policy to workers, supervisors and managers
  • Remunerate workers for their regular and overtime working hours based on regulatory requirements and industry norms; all overtime should be limited, voluntary and be paid at premium rate
  • Provide training to managers and supervisors on production planning
  • Consider operating two shifts to meet demands of fluctuating schedules and production requirements

Minimize

  • Engage with customers and suppliers and agree on systematic planning to minimize uncertainties in demand of products and supply of raw materials
  • Provide workers with periodic and clear records of pay calculations including worked overtime and received compensation

Offset

Retroactively compensate for overtime work at the established overtime rate

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