Dear Friends,
I have a doubt on overtime calculation. It is calculated on Gross Salary or Basic+DA.
Which is the correct formula to calculate.
Gross Salary/26/8*2*No of hrs of Overtime.
or
Basic+DA/26/8*2*No of hrs of Overtime.
From India, Bangalore
21I have a doubt on overtime calculation. It is calculated on Gross Salary or Basic+DA.
Which is the correct formula to calculate.
Gross Salary/26/8*2*No of hrs of Overtime.
or
Basic+DA/26/8*2*No of hrs of Overtime.
From India, Bangalore
Dear Mubashira,
[(Basic + DA)/26x8]x2xtotal Overtime Hours.
Below is a brief on over time for your understanding as per act.
As per factories Act:
Overtime : Where a worker works in a factory for more than nine hours in any day or for more than forty-eight hours in any week, he shall, in respect of overtime work, be entitled to wages at the rate of twice his ordinary rate of wages.
For the purposes of sub-section (1), "ordinary rate of wages" means the basic wages plus such allowances, including the cash equivalent of the advantage accruing through the concessional sale to workers of foodgrains and other articles, as the worker is for the time being entitled to, but does not include a bonus and wages for overtime work.
As per minimum wages ACT:
(1) When a worker works in an employment for more than nine hours on any day or for more than forty-eight hours in any week, he shall in respect of overtime work, be entitled to wages -
(a) in the case of employment in agriculture, at one and a half times the ordinary rate of wages;
(b) in the case of any other scheduled employment, at double the ordinary rate of wages;
Shops & Establishment Act:
Overtime : For any work in excess of nine hours on any day or for more than 48 hours in any week, overtime wages are to be paid at the rate of double the wages. It is provided therein that where a worker is required to work beyond the normal hours of work or on any day of rest, he shall be entitled to wages at rate of twice his ordinary rate of wages in respect of the overtime work or work done on a day of rest, as the case may be.
when payment is made on monthly scale of pay, the daily rate of wages for a worker can be obtained only by dividing the amount of wages for 30 days by 26. This is done because the workman is entitled to four days as weekly rest during which period he does not work. The reason is that workman actually gets monthly wages for the work done only for 26 days. Thus for a workman, it is the actual receipt for 26 days which is his monthly scale of pay, i.e., 30 days wages. Therefore, a day’s wage should mean the result obtained by dividing the monthly wages by actual number of working days, i.e., 26 days. This principle will, however, be applicable in case of such workers who get monthly wages only for the actual number of working days. The formula for calculation of the overtime wages for one hour is to divide the month’s wages by 26 into the number of normal working hours and the result so obtained by them then multiplied by two to calculate one hour’s overtime wages;
Hope you have got a fair idea on Overtime and calculation.
From India, Mumbai
[(Basic + DA)/26x8]x2xtotal Overtime Hours.
Below is a brief on over time for your understanding as per act.
As per factories Act:
Overtime : Where a worker works in a factory for more than nine hours in any day or for more than forty-eight hours in any week, he shall, in respect of overtime work, be entitled to wages at the rate of twice his ordinary rate of wages.
For the purposes of sub-section (1), "ordinary rate of wages" means the basic wages plus such allowances, including the cash equivalent of the advantage accruing through the concessional sale to workers of foodgrains and other articles, as the worker is for the time being entitled to, but does not include a bonus and wages for overtime work.
As per minimum wages ACT:
(1) When a worker works in an employment for more than nine hours on any day or for more than forty-eight hours in any week, he shall in respect of overtime work, be entitled to wages -
(a) in the case of employment in agriculture, at one and a half times the ordinary rate of wages;
(b) in the case of any other scheduled employment, at double the ordinary rate of wages;
Shops & Establishment Act:
Overtime : For any work in excess of nine hours on any day or for more than 48 hours in any week, overtime wages are to be paid at the rate of double the wages. It is provided therein that where a worker is required to work beyond the normal hours of work or on any day of rest, he shall be entitled to wages at rate of twice his ordinary rate of wages in respect of the overtime work or work done on a day of rest, as the case may be.
when payment is made on monthly scale of pay, the daily rate of wages for a worker can be obtained only by dividing the amount of wages for 30 days by 26. This is done because the workman is entitled to four days as weekly rest during which period he does not work. The reason is that workman actually gets monthly wages for the work done only for 26 days. Thus for a workman, it is the actual receipt for 26 days which is his monthly scale of pay, i.e., 30 days wages. Therefore, a day’s wage should mean the result obtained by dividing the monthly wages by actual number of working days, i.e., 26 days. This principle will, however, be applicable in case of such workers who get monthly wages only for the actual number of working days. The formula for calculation of the overtime wages for one hour is to divide the month’s wages by 26 into the number of normal working hours and the result so obtained by them then multiplied by two to calculate one hour’s overtime wages;
Hope you have got a fair idea on Overtime and calculation.
From India, Mumbai
Thx 4 ur response. Sry to say my doubt is not cleared i have seen few companies of same nature calculating ot on basic+da & few on monthly gross salary.
From India, Bangalore
From India, Bangalore
Dear Mubashira,
It cannot be done since the rate will be very high if you are calculating in gross, and more over every company see the cost saving.
Since you have said some companies are paying then their pay structure will be based on minimum wages and the gross salary will be merely higher than the basic+DA salary.
For eg. in karnataka the minimum wages for a sales man is Rs. 3890(Basic +VDA), but the company will pay the salary of Rs. 4000/- for the person.
In this case the gross salary is a merely higher than the basic salary. so they calculate on gross.
From India, Mumbai
It cannot be done since the rate will be very high if you are calculating in gross, and more over every company see the cost saving.
Since you have said some companies are paying then their pay structure will be based on minimum wages and the gross salary will be merely higher than the basic+DA salary.
For eg. in karnataka the minimum wages for a sales man is Rs. 3890(Basic +VDA), but the company will pay the salary of Rs. 4000/- for the person.
In this case the gross salary is a merely higher than the basic salary. so they calculate on gross.
From India, Mumbai
Dear friends,
How to calculate the percentage for depriciation for fixed assets.For Example(plant and machinery value for :9000000)
please give the correct answer...
Thanks & Regards
Syed shabeer
Accountant
From United Arab Emirates, Sharjah
How to calculate the percentage for depriciation for fixed assets.For Example(plant and machinery value for :9000000)
please give the correct answer...
Thanks & Regards
Syed shabeer
Accountant
From United Arab Emirates, Sharjah
- I do not quite agree with K_Shenbagarajan.
- Overtime is calculated based on gross salary and not alone on Basic + DA, no matter figure is big or small.
- Mr. K_Shenbagarajan is contradicting with the definition of wages for this purpose given by him in his post. Definition is reproduced below:
For the purposes of sub-section (1), "ordinary rate of wages" means the basic wages plus such allowances, including the cash equivalent of the advantage accruing through the concessional sale to workers of foodgrains and other articles, as the worker is for the time being entitled to, but does not include a bonus and wages for overtime work.
- Definition very clearly includes allowances, which means overtime is to be calculated on gross salary.
From India, Pune
Dear Kokamthankar,
That definition is given only for Basic wages and DA(that is to say, all cash payments, by whatever name called, paid to an employee on account of a rise in the cost of living), but does not include HRA or TA or Special Allowance.
For your understanding you can refer payment of gratuity or bonus act for wage definition.
Payment of gratuity
"wages" means all emoluments which are earned by an employee while on duty or on leave in accordance with the terms and conditions of his employment and which are paid or are payable to him in cash and includes dearness allowance but does not include any bonus, commission, house rent allowance, overtime wages and any other allowance.
Payment of bonus-
“salary or wage” means all remuneration (other than remuneration in respect of over-time work) capable of being expressed in terms of money, which would, if the terms of employment, express or implied, were fulfilled, be payable to an employee in respect of his employment or of work done in such employment and includes dearness allowance (that is to say, all cash payments, by whatever name called, paid to an employee on account of a rise in the cost of living),
but does not include-
(i) any other allowance which the employee is for the time being entitled to;
(ii) the value of any house accommodation or supply of light, water, medical attendance or other amenity or of any service or of any concessional supply of food grains or other articles;
(iii) any traveling concession;
(iv) any bonus (including incentive, production and attendance bonus);
(v) any contribution paid or payable by the employer to any pension fund or provident fund or for the benefit of the employee under any law for the time being in force;
(vi) any retrenchment compensation or any gratuity or other retirement benefit payable to the employee or any ex gratia payment made to him;
(vii) any commission payable to the employee.
Explanation. – Where an employee is given in lieu of the whole or part of the salary or wage payable to him, free food allowance or free food by his employer, such food allowance or the value of such food shall, for the purpose of this clause, be deemed to from part of the salary or wage of such employee;
Moreover Only the company / factory / establishment which does not worry about the salary paid to employee pay it on gross but today's scenario most of the establishment is very keen on cost effectiveness and cost reduction.
From India, Mumbai
That definition is given only for Basic wages and DA(that is to say, all cash payments, by whatever name called, paid to an employee on account of a rise in the cost of living), but does not include HRA or TA or Special Allowance.
For your understanding you can refer payment of gratuity or bonus act for wage definition.
Payment of gratuity
"wages" means all emoluments which are earned by an employee while on duty or on leave in accordance with the terms and conditions of his employment and which are paid or are payable to him in cash and includes dearness allowance but does not include any bonus, commission, house rent allowance, overtime wages and any other allowance.
Payment of bonus-
“salary or wage” means all remuneration (other than remuneration in respect of over-time work) capable of being expressed in terms of money, which would, if the terms of employment, express or implied, were fulfilled, be payable to an employee in respect of his employment or of work done in such employment and includes dearness allowance (that is to say, all cash payments, by whatever name called, paid to an employee on account of a rise in the cost of living),
but does not include-
(i) any other allowance which the employee is for the time being entitled to;
(ii) the value of any house accommodation or supply of light, water, medical attendance or other amenity or of any service or of any concessional supply of food grains or other articles;
(iii) any traveling concession;
(iv) any bonus (including incentive, production and attendance bonus);
(v) any contribution paid or payable by the employer to any pension fund or provident fund or for the benefit of the employee under any law for the time being in force;
(vi) any retrenchment compensation or any gratuity or other retirement benefit payable to the employee or any ex gratia payment made to him;
(vii) any commission payable to the employee.
Explanation. – Where an employee is given in lieu of the whole or part of the salary or wage payable to him, free food allowance or free food by his employer, such food allowance or the value of such food shall, for the purpose of this clause, be deemed to from part of the salary or wage of such employee;
Moreover Only the company / factory / establishment which does not worry about the salary paid to employee pay it on gross but today's scenario most of the establishment is very keen on cost effectiveness and cost reduction.
From India, Mumbai
Mr. Shenbagarajan K and fellow citehr members.
From India, Pune
- I still do not agree with Mr. Shenbagarajan K. I feel overtime is calculated on gross salary and not on basic + da alone. Fellow cithr members are requested to share their legal knowledge on this issue.
- Wages are defined differently for different purposes under different legislations. Definition of wages under gratuity act and bonus act is of no relevance for the purpose of calculation and payment of overtime.
From India, Pune
Dear Naziyasm,
Sory to say but i m also not agree with the statment that O.T. calculate on Basic+DA.
As per my knowledge OT is calculate on GROSS SALARY.
For.Exam.
If the salary parametres are constient than OT is calculate on Gross salary
Basic+DA+HRA+Conv.Allowance+?/26/8*2
Regards,
Niyaj Ahmed
[Sr.HR Officer]
Bajaj Electricals Ltd.
From India
Sory to say but i m also not agree with the statment that O.T. calculate on Basic+DA.
As per my knowledge OT is calculate on GROSS SALARY.
For.Exam.
If the salary parametres are constient than OT is calculate on Gross salary
Basic+DA+HRA+Conv.Allowance+?/26/8*2
Regards,
Niyaj Ahmed
[Sr.HR Officer]
Bajaj Electricals Ltd.
From India
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