Overtime rules around the world: What global employers need to know

Overtime compliance becomes more complex as companies expand across borders. Working-time limits, overtime thresholds, premium rates, exemption rules, and time-recording requirements vary significantly between jurisdictions. A policy that works in one country may create payroll, labour-law, or record-keeping risks in another.

While the ILO’s 1919 Convention established the 8-hour day and 48-hour week as a baseline, countries have developed very different approaches to overtime regulation. Premium rates range from 125% to 300% of base pay, exemption frameworks vary by role and employment status, and several major markets now require daily electronic time recording.

The comparison below examines 14 jurisdictions and outlines the overtime thresholds, premium rates, exemption categories, and recent regulatory developments that global employers should account for when managing an international workforce.

Overtime rules generally fall into three categories:

• Daily-anchored systems, where overtime begins once an employee exceeds a daily working-time limit
• Weekly-anchored systems, where overtime is calculated against total hours worked in a week
• Reference-period systems, where working time is averaged across a longer period of weeks or months

The United States follows a weekly-anchored approach under the FLSA, with a 1.5x premium applying only after 40 hours in a workweek and no federal daily trigger. British Columbia uses a daily-anchored model, requiring time-and-a-half after 8 hours worked in a day. Germany relies on a reference-period system that allows the 8-hour daily maximum to be averaged over a period of up to six months.

These differences have practical implications for payroll and workforce management. A system configured to calculate overtime on a weekly basis may undercount overtime in daily-anchored jurisdictions and overcount it in markets that use longer reference periods.

The compliance calendar for the second half of 2026 is unusually dense.

• United States: On May 14, 2026, the DOL formally restored the white-collar salary thresholds to $684 per week ($35,568 per year) for executive, administrative, and professional exemptions, and $107,432 for highly compensated employees. A Biden-era 2024 rule raising these figures was vacated by the Eastern District of Texas in November 2024. California maintains a higher threshold at approximately $70,304, plus daily overtime triggers.
• Mexico: The March 2026 constitutional amendment, implemented through LFT amendments effective May 1, 2026, phases the standard workweek from 48 hours down to 40 over four years: 46 in 2027, 44 in 2028, 42 in 2029, 40 in 2030. The reform introduces mandatory electronic time registration, a hard cap of 12 overtime hours per week by 2030, and triple-rate pay for hours exceeding the weekly cap. The 2026 transition year preserves the 48-hour week, but workforce planning should start now.
• Japan: Since April 2023, the 50% overtime premium for monthly hours exceeding 60 applies to all employers including SMEs. Article 36 Agreement caps impose hard limits: 45 hours per month and 360 hours per year, with a special-clause ceiling of 100 hours in any single month. Criminal penalties apply for breaches.
• EU Pay Transparency Directive: The transposition deadline of June 7, 2026 requires employers with 50+ employees to disaggregate overtime and shift premiums in pay-equity reporting. The Commission confirmed in December 2025 that the deadline is firm despite some Member States signalling delays.
• EU AI Act: From August 2, 2026, AI systems used for workforce scheduling fall under Annex III high-risk obligations. Providers and deployers of automated scheduling and overtime-allocation tools must implement risk management, document data governance, and ensure human oversight. Penalties reach 15 million euros or 3% of worldwide turnover.

Misclassification of overtime-exempt employees remains one of the most common wage-and-hour compliance risks. While most jurisdictions distinguish between exempt and non-exempt workers, the tests used to determine eligibility vary significantly.

In the United States, the FLSA’s white-collar exemptions require three conditions to be met:

• Salary basis
• Salary level ($684 per week as of 14 May 2026)
• Duties test for executive, administrative, professional, or computer employee categories

California applies stricter duties tests and higher salary thresholds than the federal standard.

Other jurisdictions take different approaches. In France, cadres dirigeants are excluded from working-time provisions, although courts interpret the category narrowly. The more common forfait annuel en jours arrangement places autonomous employees on a 218-day annual schedule instead of the standard 35-hour week. Employers must conduct an annual workload review; failure to do so can expose the company to overtime claims.

Germany excludes certain leitende Angestellte from the Working Time Act (ArbZG), including employees with independent hiring and dismissal authority or broad powers of attorney. Courts continue to interpret the exemption narrowly.

The UK allows employees to opt out of the 48-hour weekly average through a written agreement, while retaining statutory rest periods and holiday rights. Australia excludes award-free employees above the High Income Threshold (AUD 183,100 from July 2025) from modern award overtime provisions. In India, supervisory and managerial employees are generally excluded from the statutory 2x overtime rate under the Factories Act.

For multinational employers, exemption rules cannot be standardised across jurisdictions. An employee classified as exempt in one country may remain entitled to overtime protections in another.

The CJEU ruling in C-55/18 (CCOO v Deutsche Bank, 2019) established the EU-wide baseline: employers must set up an objective, reliable system enabling daily measurement of each worker’s hours. Recording only overtime is insufficient.

• Spain codified first: RDL 8/2019 requires daily records of start and end times for every employee, retained four years. A draft Royal Decree published October 2025 would mandate certified digital, tamper-proof systems, though the final text has not been published.
• Germany’s Federal Labour Court ruled in September 2022 that employers were already obliged to establish electronic time recording. A December 2025 ruling extended the standard universally to part-time, remote, and hybrid workers. Fines for recording failures reach 30,000 euros. A draft ArbZG reform expected in June 2026 would shift Germany from a daily maximum to a weekly maximum.
• Mexico’s April 2026 LFT amendment requires electronic recording of shift start and end times. The STPS has not yet issued implementing regulations.
• France requires individual records retained for five years. A September 2025 Cour de cassation ruling held that employees on partial paid leave may claim overtime surcharges they would have earned had they worked the full week.
• The United States requires records of hours worked each workday and total weekly hours under 29 CFR Part 516, but mandates no specific method.

The practical effect: if your footprint includes any EU market or Mexico, daily electronic recording with immutable audit trails and multi-year retention is already the floor. Deploying that standard everywhere eliminates patchwork compliance risk.

Mexico stands apart: no TOIL mechanism exists, and overtime must be paid in cash at double rate for the first nine weekly hours and triple rate for any excess. For companies managing employees across multiple TOIL-eligible jurisdictions, each employee’s compensatory balance represents a contingent liability requiring individual ledger accounts, proper accrual tracking, and reconciliation against jurisdiction-specific expiry windows.

Overtime enforcement varies significantly across jurisdictions. Some countries rely primarily on administrative penalties, while others combine regulatory enforcement with employee litigation and damages claims.

When engaging workers through an Employer of Record, the EOR becomes the legal employer and bears primary responsibility for local overtime thresholds, premium rates, and time-recording obligations. The EOR’s payroll must apply local jurisdiction rules, not the client’s home-country rules. For jurisdictions with banco de horas or TOIL arrangements, the EOR maintains individual records and balances in accordance with local requirements.

Boundless EOR service supports compliance at the local level by applying jurisdiction-specific payroll rules and monitoring legislative changes that affect working-time and overtime obligations.

Overtime compliance also intersects with contractor engagement. Where the engagement is with a genuine independent contractor through an Agent of Record, statutory overtime entitlements generally do not apply. However, where a contractor relationship is later found to be disguised employment, employers may face retroactive liability for overtime premiums and social-security contributions.

Companies managing a mix of employees and contractors across multiple jurisdictions often use EOR and AOR models to align compliance obligations with the underlying working relationship.