When flexibility turns costly: China’s shifting approach to alternative working hour systems

At a glance

• Following renewed public debate on overwork, Chinese labour authorities are applying existing working time rules more cautiously in practice.
• Although no formal legal changes have been introduced, approvals for alternative working hour systems are becoming harder to obtain.
• Labour bureaus are narrowing the circumstances in which flexible and comprehensive working hours arrangements will be approved.
• Practices previously tolerated, particularly those aimed at limiting overtime liability, are now subject to closer scrutiny.
• Employers should reassess approval risks, renewal prospects and overtime management under evolving enforcement expectations.

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In March 2026, the sudden death of Zhang Xuefeng, a well-known education entrepreneur and livestreamer in his early forties, prompted renewed public discussion in China about workload pressure, long working hours, and the physical and mental toll of overwork due to 'involution'. While the incident did not trigger any formal regulatory change, it has become a powerful reminder of concerns that have been building within society for some time.

Against this social backdrop, employers have increasingly felt a change in how regulators view working time arrangements in the past year or so. Although the relevant laws and published rules governing alternative working hour systems remain unchanged, local labour authorities have, in practice, adopted a noticeably more cautious and restrictive approach when reviewing and approving such arrangements.

For employers, the key takeaway is not that the rules have changed overnight, but that how the rules are applied is evolving, and practices that were previously tolerated may now attract closer scrutiny.

Alternative working hour systems: From common practice to closer scrutiny

In China, employers may apply for two alternative working hour systems to depart from the standard eight-hour workday / 40-hour workweek model: the Flexible Working Hours System and the Comprehensive Working Hours System. Both systems require prior approval from the local labour bureau and are, on their face, intended to apply only to genuinely special positions.

In practice, however, these systems have historically been used relatively widely, particularly as a means of managing or limiting overtime payment exposure. Over the past year or so, we have observed that labour bureaus are applying the same written rules with increasing conservatism, narrowing the range of situations in which approvals will be granted.

Flexible Working Hours System: A higher bar in practice

The flexible working hours system is designed for roles where fixed schedules are genuinely impractical, such as senior management, sales, or field-based positions. Employees approved under this system are generally not entitled to overtime pay, subject to limited local exceptions (for example, work performed on public holidays in certain cities).

While the underlying eligibility criteria have not been formally amended, labour bureaus in many cities have, over the past year, taken a more stringent interpretation in practice:

• 'Senior managers' narrowly construed: Authorities increasingly limit this category to roles such as General Manager, Deputy General Manager, and Chief Financial Officer. Where companies seek to include other managerial roles, they may be required to amend their Articles of Association and provide evidence demonstrating that these roles carry substantial decision‑making authority.
• Field positions examined more closely: In some regions, employee handbooks must clearly specify which roles qualify as 'field positions.' Additionally, certain labour bureaus now expect evidence that employees spend more than 50% of their working time outside the company’s registered location, supported by materials such as travel itineraries or transport and accommodation records.
• Income level as a screening factor: Some bureaus require social insurance records showing that the employee’s salary exceeds three times the previous year’s local average monthly wage, reflecting concern about the use of the flexible system for lower-paid roles.

As a result, approvals that were once relatively routine are now far less predictable, even where documentation is complete, as final discretion remains with the labour bureau.

Comprehensive Working Hours System: A more cautious scope

Under the comprehensive working hours system, working hours may be averaged over an approved cycle, allowing longer hours during peak periods without daily overtime, provided statutory limits are observed. Importantly, under an approved comprehensive system, hours exceeding statutory limits within the approved cycle remain subject to overtime pay at 150%, regardless of whether the excess work falls on working days or rest days.

Here too, the written framework remains unchanged, but the approach to approval has become more restrained. In practice, approvals are now more commonly limited to sectors traditionally associated with irregular working patterns, such as aviation, maritime transport, tourism, and agriculture. Applications from factories outside these sectors, retail businesses with seasonal peaks, and similar operations have increasingly been denied preventing employers from reducing their overtime payment obligations.

Why the more cautious approach?

Rather than reflecting a formal policy change, this shift appears to stem from broader regulatory and social considerations. Authorities are applying existing rules with greater emphasis on their original purpose, restricting alternative working hour systems to genuinely exceptional roles and encouraging wider use of the standard working hours system.

This trend aligns with growing concern over excessive overtime, employee well-being, and work–life balance, as well as high-quality development and de-involution campaign. High-profile overwork-related discussions, including those triggered by recent tragedies, have amplified public attention and may indirectly influence enforcement attitudes, even in the absence of new legislation.

Practical takeaways for employers

In light of this evolving enforcement mindset, companies using or considering alternative working hour systems should reassess their arrangements with care:

• Confirm local practice, not just written rules: Requirements and expectations vary significantly by city and district. Early discussions with the local labour bureau can provide valuable insight into likely approval outcomes.
• Plan for annual re-approval risk: Approvals are typically valid for one year only. Renewal is not guaranteed, and operating without valid approval may expose employers to overtime claims.
• Handle transitions sensitively: Where approval cannot be renewed, affected employees may need to move back to the standard working hours system. Poorly managed communication can increase dispute risk.
• Review overtime governance: As reliance on alternative systems becomes less certain, clear overtime approval, compensation, and time-off-in-lieu policies are increasingly important.
• Strengthen attendance and working time records: Accurate records remain critical, particularly for roles involving travel, remote work, or irregular schedules that fall outside approved alternative systems.

What recent developments illustrate is not a sudden regulatory shift, but a gradual tightening in how existing rules are applied. Employers that regularly review whether their working hour arrangements still fit the spirit as well as the letter of the law will be better positioned to manage compliance, cost, and reputational risk as enforcement expectations continue to evolve.