SOEs told to cap overtime pay to hours beyond 48-hour workweek

Government-owned companies and their subsidiaries are set to implement stricter overtime rules as part of a nationwide push to reduce operating costs and improve financial sustainability. The Privatization and Corporatization Board (PCB) has instructed all state-owned enterprises (SOEs) to revise their overtime regulations and bring them under a single standard, with the changes taking effect on August 1.

According to the PCB, the main aim of the overhaul is to curb excessive overtime spending and introduce a more disciplined, cost-effective system. Under the new standard, employees will only be eligible for overtime pay for hours worked beyond 48 hours per week. Companies must also set a maximum cap on overtime pay and determine the most financially efficient method of calculating overtime.

Overtime practices have long varied across SOEs. Some companies had no clear limits, resulting in large portions of employee salaries being driven by overtime. There have also been recurring complaints that some staff intentionally delay work to earn overtime, while politically influenced over-staffing has further strained company finances. Audit reports and experts have repeatedly flagged unchecked overtime payments as a contributor to the deteriorating financial position of several SOEs.

The Finance Ministry has described the introduction of a unified overtime standard as an important step toward strengthening management and reducing wasteful expenditure. It comes amid broader cost-cutting measures across the state-owned sector. In April, the ministry ordered SOEs to reduce their workforce by 33 percent within three months to reinforce cost discipline and improve operational efficiency.

Then-Finance Minister Moosa Zameer said government companies employed around 42,000 people. Following the downsizing directive, companies such as Fenaka and Housing Development Corporation (HDC) introduced voluntary resignation packages, offering three to four months’ salary upfront to employees who choose to leave. The ministry has said reducing staff numbers, slowing new hiring, and cutting overtime costs are key components of its strategy to help SOEs achieve financial self-sufficiency.

Companies have until July 30 to complete the required changes to their overtime regulations. The new rules will come into force on August 1.