China Expands Public Holidays: Embracing a More Employee-Friendly Holiday Arrangement

On 12 November 2024, the State Council released the Decision on Amending the Measures for National Holidays and Memorial Days[1] ("Decision"), set to take effect on 1 January 2025. The amendments to the Measures for National Holidays and Memorial Days[2] ("Holiday Measures") involve two key changes: firstly, the addition of two new public holidays, increasing the total from 11 to 13 days, effective from 1 January 2025; secondly, clearer guidelines for rest day swap have been established, generally ensuring that, with few exceptions, the number of continuous workdays before or after public holidays does not exceed six.

Expanding public holidays: increasing from 11 to 13 days

Under the revised Holiday Measures, effective from 1 January 2025:

• Spring Festival (i.e. Chinese New Year): The public holiday extends from 3 days (i.e. the first to the third day of the first month of the lunar calendar) to 4 days, now including Chinese New Year’s Eve; and
• Labour Day: The public holiday increases from 1 day (i.e. 1 May) to 2 days (i.e. 1 and 2 May).

See the table below summarising the public holiday arrangements before and after 1 January 2025:

The increase in statutory holidays underscores the State's commitment to employees’ rights to vacation. Notably, designating Lunar New Year's Eve as a statutory holiday addresses a long-standing public demand.

Unveiling and clarifying rest day swap principle

A new article has been included in the Holiday Measures: “Public holidays, when all citizens can take a holiday break, may be rearranged for uniform rest day swapping. This, combined with the system of paid annual leave and other mechanisms, aims to create longer holiday periods. Except in few special circumstances, continuous work should generally not exceed six days before or after a public holiday.”

The purpose of this new provision is to formalise through administrative regulation the rest day swap arrangements developed by the General Office of the State Council over the years, establishing it as the future principle for rest day swaps. According to the State Council's clarification, most holidays, except certain special festivals, are structured as follows: The Spring Festival will be an 8-day holiday starting from Lunar New Year's Eve; the National Day holiday will last 7 days starting from 1 October; Labour Day will be a 5-day holiday; New Year's Day, Ching Ming, Dragon Boat, and Mid-Autumn festivals will have a 3-day holiday or just one day if they fall on a Wednesday. Additionally, National Day can be combined with the approaching Mid-Autumn Festival for a total of 8 days’ holiday.[3] Employees can also utilise paid annual leave and combine it with public holidays, allowing them to arrange their holidays flexibly as per their discretion.

What this means for employers

• Adapting holiday policies and workforce arrangements: With the increase in public holidays, businesses should promptly revise their holiday policies and workforce arrangements. The introduction of two additional public holidays necessitates that companies carefully review and plan their annual work schedules to ensure seamless business operations during these periods. Furthermore, the extra public holidays could elevate labour costs for businesses, potentially requiring more overtime payments or the hiring of part-time employees to fill in job vacancies during these times.
• Changes in system working hours: Before the amendment of the Holiday Measures, the Circular on Issues Concerning the Conversion of the Average Monthly Working Hours and Wages of Employees throughout the Year ("Circular") issued by the former Ministry of Labour and Social Security in 2008[4] established that employees work 250 days annually, with an average of 20.83 working days per month. Following the amendment of the Holiday Measures, the annual working days will decrease to 248, resulting in an average of 20.67 working days per month[5] (i.e. 248 days ÷ 12 months). This adjustment will also alter the number of hours worked annually, quarterly, and monthly,[6] potentially impacting the overtime wage payments to employees. It is anticipated that the revision of the Holiday Measures will lead to a subsequent update of the said Circular. We will monitor closely how this develops.
• Settling overtime pay in accordance with the law: Starting from 1 January 2025, public holidays for all citizens will include Chinese New Year's Eve and 2 May each year. If a company requires employees to work overtime on these public holidays, it must compensate them according to the law and local regulations. Specifically:
  • If the company adopts standard working hours system or comprehensive calculating working hours system[7] to its employees, and the company arranges for the employees to work overtime on public holidays, it shall pay the employees overtime wages of not less than 300% of the daily or hourly wage; or
  • If the company implements flexible working hours system[8] for its employees, and the company requires them to work overtime on public holidays, the company should determine whether to pay overtime wages to them and how to calculate the payment in accordance with local regulations.[9]

Enterprises should note that the increase in public holidays will impact working hours and overtime pay as previously mentioned. It is critical to enhance the management of employee working hours.

Additionally, for companies adopting comprehensive working hour system, if an employee's working hours in a monthly, quarterly, or yearly cycle exceed the designated working hours, the excess should be considered overtime, and the employee must be compensated at no less than 150% of their hourly wage. As previously noted, the new Holiday Measures will alter employees' annual, quarterly, and average monthly working hours, thereby affecting overtime pay calculations under the comprehensive working hour system. We recommend that enterprises monitor any revisions to the Circular to ensure accurate overtime wage payments in the comprehensive working hour system.

• Enhancing management of employees’ annual leave: The revision of the Holiday Measures is expected to motivate employees to take longer breaks by utilising paid annual leave. It is anticipated that authorities will introduce more policies to actively promote the use of the paid annual leave system, allowing individuals to arrange their holidays flexibly and at their own discretion.[10] Accordingly, employers are recommended to review or update their paid annual leave management systems to align with business needs, improve the management of employees' paid annual leave, and optimise their production and business activities.

[1]《关于修改<全国年节及纪念日放假办法>的决定》

[2]《全国年节及纪念日放假办法》

[3] Six Questions on the Revision of the Holiday Measures and the Arrangement of Selected Holidays in 2025 (放假办法修改及2025年部分节假日安排六问), https://www.gov.cn/zhengce/202411/content_6986415.htm

[4] 《关于职工全年月平均工作时间和工资折算问题的通知》

[5] The calculation of 20.67 days is based on our own computations, and the final number of days should be confirmed as announced in the updated Circular..

[6] Working hours are determined by multiplying the number of working days in a month, quarter, or year by eight hours per day. Considering the changes and our calculations, the total annual working hours amount to 1,984, quarterly working hours to 496, and monthly working hours to approximately 165.36.

[7] The comprehensive calculating working hours system is a work system where, under certain conditions (such as due to special job requirements, natural condition constraints, seasonal constraints with significant peak and off-peak periods, etc.), a company calculates employees' working hours over cycles of weeks, months, quarters, or years. The average daily working hours and average weekly working hours should be essentially the same as the statutory standard working hours system (i.e. the default working hours system under PRC law). In general, companies need to apply to the local human resources and social security administration and obtain necessary approval before implementing this comprehensive calculating working hours system.

[8] The flexible working hours system is a working hours system used when a company, due to special work circumstances, needs to assign employees to flexible tasks and cannot apply the standard working hours system, thus using this flexible working hours arrangement. Generally, companies need to apply to the local human resources and social security administration and obtain necessary approval before implementing this flexible working hours system.

[9] According to the Shanghai Measures for the Payment of Wages by Enterprises (上海市企业工资支付办法), if an employee approved to work under the flexible working hours system is required to work on a public holiday, they must be paid overtime wages at a rate of at least 300% of their daily or hourly wage.

[10] Six Questions on the Revision of the Holiday Measures and the Arrangement of Selected Holidays in 2025 (放假办法修改及2025年部分节假日安排六问), https://www.gov.cn/zhengce/202411/content_6986415.htm