What is Overtime?

Definition

Overtime is work beyond the statutory daily or weekly limit, and in India the central labour statutes that prescribe an overtime rate set it at twice the ordinary rate of wages.

How it works

Two things decide an overtime bill: the threshold beyond which hours count as overtime, and the multiplier applied to them. Both come from statute rather than from company policy, and a policy paying less than the statutory rate does not reduce the entitlement.

What it means in India

Section 59 of the Factories Act 1948 requires payment at twice the ordinary rate of wages for work beyond nine hours in a day or forty-eight in a week, and the Minimum Wages Act 1948 framework similarly provides for overtime at the prescribed rate. State Shops and Establishments Acts carry their own overtime provisions and daily and weekly limits, so the threshold depends on which act reaches your establishment even where the multiplier does not.

What people get wrong

• Paying overtime at one and a half times. That is a rate borrowed from elsewhere; the Indian statutes that prescribe a rate say twice.
• Computing the ordinary rate on basic alone where the applicable act defines wages more broadly.
• Treating an employee agreement to work extra hours as a waiver. Statutory entitlements are not waived by consent.

Work out your own number

The arithmetic on this page is easier to check against a real salary than to follow in prose, so there is a free page that does it for you. No sign-up.

Terms this one depends on

More on attendance and shifts

Where this shows up in practice

Almost everything on this page ends up as a line on a payslip or a figure in a register. Shiftelio keeps attendance, leave, salary structure and the statutory deductions in one place, so the number in the letter and the number in the payslip come from the same record.