Protests against the policy and other measures of Prime Minister Viktor Orban's government have been taking place for over a week. There have been occasional clashes between protesters and police.
Hungarian President Janos Ader has signed into law a labour reform dubbed a "slave law" by the opposition despite days of protests, according to a statement on his official website.
"I studied the changes to the labour law, and its provisions do not run contrary to the constitution," Ader said.
The law hikes the overtime that employers can demand from 250 to 400 hours per year and allows payment to be delayed by up to three years.
Thousands of people have taken part in demonstrations against Prime Minister Viktor Orban's government since MPs passed the law on 12 December, with police and protesters clashing outside parliament.
Ader said the provisions of the reform were no more strict than laws governing overtime in other comparable EU countries.
He said he was confident that "the safeguards that protect (workers') rights have not been weakened, since overtime will only be given with prior written consent".
"For these reasons I have signed the law despite the concerns and I hope that they will have a calm and peaceful holiday period," the statement added.
Protesters against the measure had asked Ader not to sign the law into force and unions have threatened to organise a general strike if Ader did so.
The rallies have succeeded in uniting a broad swathe of opposition parties against the government of right-wing nationalist Orban.
On Monday several thousand people gathered to protest outside the offices of the public broadcaster MTVA, as opposition MPs entered the premises and demanded a list of protesters' demands be read out.