Did COVID-19 make you work overtime to save that job? Were you paid a single penny for those overtime hours in addition to the regular wages? The answer might be negative, and this fact reflects the lack of overtime laws for salaried employees. There are several workplaces which are subject to labour law on overtime in India. Whether the central or state government is empowered to decide the applicable overtime payment rules is provided in such legislation. One should take note of the fact related to state laws that the overtime rules in Gujarat may not be identical to the overtime payment rules in Maharashtra or any other state. Know more about labour law on overtime in India.
The Factories Act 1948 and state-specific Shops and Establishments Acts together with additional industry-specific laws constitute Indian Labour Laws regarding overtime and working hours regulation.
The Factories Act specifies that employees can work up to 50 hours of overtime during each quarterly period in India. The labour law on working hours in India ensures that employees are not overburdened, and proper compensation is paid when they are required to work extra. Each state operates its own rules through the Shops and Establishments Act to determine daily working hours while specifying overtime provisions with slightly different requirements.
Overtime Payment Rules in India
There are several laws in India which govern the maximum overtime hours allowed in India and also provide for an overtime calculation formula in India. Overtime payment rules in India are governed by various labour laws such as the Factories Act, 1948, Shops and Establishments Acts of different states, and other industry-specific regulations. Any work performed after normal daily hours between 8–9 or beyond the weekly 48 hours counts as overtime work. Under the Factories Act Section 59, employees get double wages for overtime duties.
Currently, the overtime laws for salaried employees are not functional for many industries. However, in the coming days, with the enforcement of new labour codes in India, the picture may change for the better. Consultation with local labour lawyers may help employees/ workmen understand who is eligible for overtime pay in India.
Applicability of Overtime Laws for Salaried Employees
There is often confusion regarding the overtime laws for salaried employees. Managerial and supervisory positions usually do not meet the criteria for receiving overtime benefits according to specific legal standards. Employees who meet the definition of “worker” under specific regulations will receive overtime remuneration even if they receive a salary. The new overtime laws for salaried employees in some states are aiming to provide more clarity on eligibility and calculation methods.
Employer Obligations and Employee Rights
Both employers and employees must keep accurate records of employee working hours while employees must receive proper overtime compensation that follows regulatory requirements. Any violation of India’s overtime rules will result in government-imposed fines. If Indian employees experience issues with overtime compensation they must know their rights and they should ask for resolution according to the current labour laws.
What are the Rules for Extra Wages for Overtime?
Based on the industry one works for, the overtime payment rules vary. Some workplaces may be governed by the central laws, while others might be subject to state laws. Knowing employee rights may empower the working class. Given below are the overtime payment rules under several legislations:
Factory: Factories Act, 1948
- Weekly Limit - Maximum 48 hours a day.
- Daily limit - Maximum 9 hours a day.
- Interval - No work for more than 5 hours without an interval.
- Spreadover - Working hours including interval period not more than 10.5 hours.
- Overtime limit - Daily work time inclusive of overtime shall not exceed 10 hours which is 60 hours on a weekly basis. Overtime hours can not exceed 50 hours in a quarter (3 month period).
As per Section 59 of the Factories Act, 1948, a person is entitled to be paid overtime wages twice their ordinary rate of wages in case he/ she is required to work for more than 9 hours a day or more than 48 hours in a week. The wages mentioned here are equivalent to the basic wages along with allowances, but do not include any bonuses or other overtime wages. In case a worker is paid on a ‘piece rate’ basis, the time rate will be calculated on the basis of the previous month, and the amount of overtime wages will be calculated accordingly.
Shop/ Establishment: Shops and Establishments Act of States/ UTs
- Daily working hours may range from 8-10 hours
- Weekly working hours can not exceed 48 hours
- Overtime may range from 10-11 hours on a daily basis (1 to 3 hours)
- No continuous (break-free) work for more than 5 hours in one go
- Weekly limit of 50-60 hours
- Quarterly limit of 50-150 hours
- Spreadover limit of 10-14 hours
Depending upon the rate fixed by states or union territories, employees are paid for the overtime hours apart from fixed working hours in the shops or establishments. In some of the states, the overtime amount is twice the usual working hours. Here again, the employee's overtime rate is calculated for basic + allowances (not including any bonus).
Minimum Wages Act of States/ UTs
- If work time exceeds the fixed hours, employees are entitled to overtime payment rules for such hours or part of an hour
- Appropriate government may fix the overtime rate
- Employees be entitled to wages an overtime rate for working on a rest day
Mines Act, 1952
- Daily Working Hours - 9 hours a day above ground/ 8 hours a day under the ground
- Weekly hours - Maximum 48 hours a week
- Overtime - If a person works for more than a fixed time (above or below the ground), he/ she is entitled to overtime wages twice the ordinary rate
- The payment will be equivalent in case of employee works on a piece rate
- There is a work hour limit of a maximum of 10 hours a day, inclusive of overtime
Contract Labour (Regulation & Abolition) Act, 1970
- A contractor has to maintain an Overtime Register, maintaining the overtime hours and overtime wages paid to the workmen.
Building and Other Construction Workers (Regulation of Employment Service) Act, 1996
- Work on a rest day be paid equivalent to overtime wages
- Any worker working for more than the fixed working hours on a day is entitled to overtime wages, double the amount paid for usual working hours.
Working Journalist (Conditions of Service) and Miscellaneous Provisions Act, 1955
- Daily working hours - Maximum 6 hours in day shift and 5.5 hours in night shift
- Overtime - Working journalists working more than fixed hours are compensated with rest hours equivalent to the overtime hours.
What is the formula for calculating overtime?
It is evident from the laws governing overtime payment rules mentioned above that the field of work and location (State or Union territory) play an important role in which the overtime amount may vary. For instance, the overtime payment rules in Maharashtra may not be similar to those of Himachal Pradesh. However, on average and for those industries governed by the central laws, the following overtime calculation formula in India may apply:
Is overtime calculated on basic or gross salary?
As per the overtime payment rules in India, it is calculated on basic salary. It may also include dearness or any other allowance. But it may be noted that labour law on overtime in India excludes any bonus or other such incentive while deciding or calculating overtime payment rules. In any case, the overtime payment rules do not regard the gross salary. But if there is no statutory obligation and the employer wishes to reward the hard-working employees voluntarily, overtime payment rules in India do not restrict the same. In such a case, whether overtime is paid on basic or gross in India is the employer’s choice.
Who is Eligible for Overtime Pay?
- A person working in any factory
- A person working in mines (underground or above ground)
- Working journalists
- Building or construction workers
- Any person working in a scheduled employment
- Any person working in a shop or establishment
- Contractual labour
Who is not Eligible for Overtime Pay in India?
- Any member of the armed forces
- Any person working beyond the overtime work limits
- Any person working overtime without authority
Although some states may not promote overtime laws for salaried employees, the proposed labour codes do have overtime payment rules for white-collared salaried employees in India.
Can my employer make me work overtime without pay?
It depends on the industry a person is employed. If the employment falls under any one of those mentioned above, the employer can not make an employee work overtime without paying the overtime wages. However, for those working in an employment which is not governed by overtime laws for salaried employees, they may have to wait for the upcoming and updated labour codes in India.
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