Hello, I need insights on the correct way to calculate employee overtime pay.
1. Should it be based on the CTC amount or only on the base salary plus allowances?
2. Allowances: does it include - House rent allowance, Conveyance allowance and Special allowance?
From India, Shillong
1. Should it be based on the CTC amount or only on the base salary plus allowances?
2. Allowances: does it include - House rent allowance, Conveyance allowance and Special allowance?
From India, Shillong
Overtime calculation under Factories Act is more than 48 hours in a week or 9 hours per day. It should be on gross monthly wages. In case of more than 9 hours per day 9th hour will be single rate and rest hours will be double the ordinary rate of wages ( monthly gross ). OT rate more than 48 hours in a week, entire hours payment will be double the rate.
S K Bandyopadhyay ( WB, HOWRAH )
CEO-USD HR Solutions
From India, New Delhi
337S K Bandyopadhyay ( WB, HOWRAH )
CEO-USD HR Solutions
From India, New Delhi
OT is calculated on Basic wage + D A. at double the rate when worked more than 9 hours a day or 48 hrs in a week HRA Conveyance allowance are not included in calculation of OT.
From India, Pune
From India, Pune
Wages for the purpose of overtime calculation shall include all allowances as per contract of employment. Therefore, if the employee is given HRA separately as a compensatory allowance to meet the cost of staying in leased accommodation, then only the same can be excluded from the scope of wages. Similarly, conveyance allowance paid to reimburse or compensate the cost of travel to and from the factory can be excluded.
Special allowance is an allowance paid only to some category of employees who possesses some special skill. If the employee to whom special allowance is paid works overtime, naturally, his overtime allowance should be calculated on the wages including special allowance. It is also an accepted rule that an allowance paid to all employees universally should be part of basic wages.
Simply. if the HRA, conveyance and special allowance are subjected to proportionate deduction in the case of absence without leave/ without pay, they are part of the salary only, and in such a scenario the gross salary inclusive of allowances should be considered for overtime calculation. On the other hand, if HRA is paid to a particular employee as per separate arrangement, then that amount is practically an amount payable even if the employee is absent without leave for a few days. Obviously, if he works overtime, the land lord will not ask for enhanced rent. Similarly, if an employee is paid travelling allowance for the days physically present at a prescribed rate, the same is not required to be paid for overtime working because in order to do the overtime work, he is not going back and coming again so that he will incur additional expenditure.
From India, Kannur
Special allowance is an allowance paid only to some category of employees who possesses some special skill. If the employee to whom special allowance is paid works overtime, naturally, his overtime allowance should be calculated on the wages including special allowance. It is also an accepted rule that an allowance paid to all employees universally should be part of basic wages.
Simply. if the HRA, conveyance and special allowance are subjected to proportionate deduction in the case of absence without leave/ without pay, they are part of the salary only, and in such a scenario the gross salary inclusive of allowances should be considered for overtime calculation. On the other hand, if HRA is paid to a particular employee as per separate arrangement, then that amount is practically an amount payable even if the employee is absent without leave for a few days. Obviously, if he works overtime, the land lord will not ask for enhanced rent. Similarly, if an employee is paid travelling allowance for the days physically present at a prescribed rate, the same is not required to be paid for overtime working because in order to do the overtime work, he is not going back and coming again so that he will incur additional expenditure.
From India, Kannur
The purpose of overtime calculation, it is Basic+DA +all allowances but except of production linked bonus.
In our country there exist no such rules for payment of salary but it to be understand on basis of minimum wages. The minimum wages which does not meet the bare minimum needs of one. This discrimination leads to exploitation of human resources.Salaried employees: The formula is: \(OT=2 times of {Basic salary+DA+any other allowance} to Divide by Total number of working days in a month, further divide by 8 to find hourly rate.
From India, Mumbai
In our country there exist no such rules for payment of salary but it to be understand on basis of minimum wages. The minimum wages which does not meet the bare minimum needs of one. This discrimination leads to exploitation of human resources.Salaried employees: The formula is: \(OT=2 times of {Basic salary+DA+any other allowance} to Divide by Total number of working days in a month, further divide by 8 to find hourly rate.
From India, Mumbai
Hi Nazarine,
Is your query related to those employed in a factory or shops & other commercial establishments? Once this is clear then the definition for ''''wages' will also can be clear. In any case there is no concept of 'CTC' under Indian labour laws and therefore you need not worry about it.
Pl.go thru' the contents in these cases:
- Numaligarh Refinery Ltd. And Others v. Workmen, Rep. By The General Secretary Gauhati High Court - Sep 8, 2022.
- Govind Bapu Salvi And Others v. Vishwanath Janardhan Joshi And Others Supreme Court Of India - Sep 22, 1993.
- Workmen Of The Calcu... v. Calcutta Electric Su... Supreme Court Of India May 1, 1973
- AMPLOYEES UNION ORDNANCE FACTORY v. M/O DEFENCE Central Administrative Tribunal Apr 25, 2018.
From India, Bangalore
Is your query related to those employed in a factory or shops & other commercial establishments? Once this is clear then the definition for ''''wages' will also can be clear. In any case there is no concept of 'CTC' under Indian labour laws and therefore you need not worry about it.
Pl.go thru' the contents in these cases:
- Numaligarh Refinery Ltd. And Others v. Workmen, Rep. By The General Secretary Gauhati High Court - Sep 8, 2022.
- Govind Bapu Salvi And Others v. Vishwanath Janardhan Joshi And Others Supreme Court Of India - Sep 22, 1993.
- Workmen Of The Calcu... v. Calcutta Electric Su... Supreme Court Of India May 1, 1973
- AMPLOYEES UNION ORDNANCE FACTORY v. M/O DEFENCE Central Administrative Tribunal Apr 25, 2018.
From India, Bangalore
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Overtime calculation- weekly hours of work.PDF
SALARY SHEET CALCULATION.xls