Hi everyone, thank you for providing information in my last post. Please guide me on whether a company can eliminate its overtime culture completely. Instead of offering overtime, can they provide compensatory time off and rename the pay head to recognize good work or as another allowance? Is this practice acceptable? If so, please assist me by indicating the relevant sections and laws that allow us to implement this practice, or if it is not permitted, kindly advise on the appropriate way to adjust overtime while still complying with the government's regulations on overtime. I'm from Chandigarh. It would be appreciated if you could include the sections and laws along with the answers.
From India, Ludhiana
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4From India, Ludhiana
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Dear Poonam,
The 2nd, 3rd, and 4th sentences of your post are not just contradictory but confusing too. In the 2nd sentence, you write that you could do away with the OT culture completely. But then in the next sentence, you ask for the compensatory off (Comp off). However, comp off is always given for overwork. Why are employees overworking? If they are overworking, then how could you do away with the OT culture?
The 2nd and 4th sentences contradict each other. You wanted to insert a new head in the payslip for "good work allowance". This is notwithstanding doing away with the OT culture.
I recommend you write clearly about the correct position and your request as well. Substituting OT with some other code in the payslip does not serve any purpose. You need to do a Root Cause Analysis (RCA) of the problem of OT. To do so, you may click here to refer to the reply to my past post.
Subsequently, you have written, "kindly guide me the appropriate way to manipulate overtime." Well, madam, this forum is not for providing suggestions on manipulations. This forum is for professionals, and professionals do not suggest tricks or loopholes in the law. I request you to look for a different forum.
Thanks,
Dinesh Divekar
From India, Bangalore
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The 2nd, 3rd, and 4th sentences of your post are not just contradictory but confusing too. In the 2nd sentence, you write that you could do away with the OT culture completely. But then in the next sentence, you ask for the compensatory off (Comp off). However, comp off is always given for overwork. Why are employees overworking? If they are overworking, then how could you do away with the OT culture?
The 2nd and 4th sentences contradict each other. You wanted to insert a new head in the payslip for "good work allowance". This is notwithstanding doing away with the OT culture.
I recommend you write clearly about the correct position and your request as well. Substituting OT with some other code in the payslip does not serve any purpose. You need to do a Root Cause Analysis (RCA) of the problem of OT. To do so, you may click here to refer to the reply to my past post.
Subsequently, you have written, "kindly guide me the appropriate way to manipulate overtime." Well, madam, this forum is not for providing suggestions on manipulations. This forum is for professionals, and professionals do not suggest tricks or loopholes in the law. I request you to look for a different forum.
Thanks,
Dinesh Divekar
From India, Bangalore
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Dear Poonam,
We are expected to do things only as the law says, and if we fail to do so, or do it in any other way that suits our convenience, it is not compliance but sheer contravention that would be visited with a penalty. Therefore, no intelligent manipulation can substitute effective compliance. If over time work is a regular feature of an entity, it is indicative of managerial deficiencies such as inadequate manpower planning, loose work schedule, improper supervision, or control, and the like.
The restrictions on over time work should be understood by every employer in the right perspective. Firstly, the restriction on its duration per day/week/quarter is only to avoid excessive physical strain on the workers and ensure them sufficient leisure after long working hours. Secondly, the enhanced rate of normal wages prescribed for overtime work is to discourage the practice of extracting more work from the same workers instead of engaging the services of additional workforce on normal wages, thereby creating more employment.
The provision for overtime work is only a concession to meet emergencies and not a privilege to defeat the purpose behind the concession.
From India, Salem
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We are expected to do things only as the law says, and if we fail to do so, or do it in any other way that suits our convenience, it is not compliance but sheer contravention that would be visited with a penalty. Therefore, no intelligent manipulation can substitute effective compliance. If over time work is a regular feature of an entity, it is indicative of managerial deficiencies such as inadequate manpower planning, loose work schedule, improper supervision, or control, and the like.
The restrictions on over time work should be understood by every employer in the right perspective. Firstly, the restriction on its duration per day/week/quarter is only to avoid excessive physical strain on the workers and ensure them sufficient leisure after long working hours. Secondly, the enhanced rate of normal wages prescribed for overtime work is to discourage the practice of extracting more work from the same workers instead of engaging the services of additional workforce on normal wages, thereby creating more employment.
The provision for overtime work is only a concession to meet emergencies and not a privilege to defeat the purpose behind the concession.
From India, Salem
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Dear Madam,
It is presumed that your establishment is either a factory or commercial establishment. In which case, you come within the purview of the Factories Act/ State Rules or States Shops and Commercial Establishment Act/Rules.
Under the respective applicable law, you are governed by daily/weekly hours, spread over, daily/weekly/quarterly limits of permitted overtime hours.
As regards overtime work done, the law only prescribes twice the rate of payment and no compensatory off in lieu of it. So legally, it is not permitted. It is better you give up thoughts of doing something against the law.
To stop or control the so-called "overtime culture," is entirely in your hands through better planning and scheduling of workflow, supervision, and monitoring. Workers have no say in it. If you get your acts well together, OT culture will fade.
As regards compensatory off, it is required to be given for working a full day on a weekly off day/paid holiday as a substitution. If you are thinking of combining overtime work done on different days and giving compensatory off in order to wriggle out of the double rate of payment, it would amount to a violation of the legal provisions, inviting prescribed punishment.
You also want to scuttle the law by renaming OT payment by disguising it with a different pay head.
Your intentions of doing what is stated in your post either are unclean or arising out of ignorance of the prevailing law.
It is better you act within the ambit of the law in the light of the views expressed on your post by the learned colleagues.
Regards,
Vinayak Nagarkar
HR and Employee Relations Consultant
From India, Mumbai
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It is presumed that your establishment is either a factory or commercial establishment. In which case, you come within the purview of the Factories Act/ State Rules or States Shops and Commercial Establishment Act/Rules.
Under the respective applicable law, you are governed by daily/weekly hours, spread over, daily/weekly/quarterly limits of permitted overtime hours.
As regards overtime work done, the law only prescribes twice the rate of payment and no compensatory off in lieu of it. So legally, it is not permitted. It is better you give up thoughts of doing something against the law.
To stop or control the so-called "overtime culture," is entirely in your hands through better planning and scheduling of workflow, supervision, and monitoring. Workers have no say in it. If you get your acts well together, OT culture will fade.
As regards compensatory off, it is required to be given for working a full day on a weekly off day/paid holiday as a substitution. If you are thinking of combining overtime work done on different days and giving compensatory off in order to wriggle out of the double rate of payment, it would amount to a violation of the legal provisions, inviting prescribed punishment.
You also want to scuttle the law by renaming OT payment by disguising it with a different pay head.
Your intentions of doing what is stated in your post either are unclean or arising out of ignorance of the prevailing law.
It is better you act within the ambit of the law in the light of the views expressed on your post by the learned colleagues.
Regards,
Vinayak Nagarkar
HR and Employee Relations Consultant
From India, Mumbai
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If any claim is filed by any workman claiming overtime under the Payment of Wages Act, then it may warrant compensation up to 10 times.
It is better that you seek proper advice regarding your specific query.
- S. K. Mittal
9319956443
From India, Faridabad
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It is better that you seek proper advice regarding your specific query.
- S. K. Mittal
9319956443
From India, Faridabad
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Vinayak Nagarkar, Umakanthan.M, Dinesh Divekar,
Thank you all for your valuable advice.
Dinesh Divekar,
I myself am quite confused about what exactly my HR head is willing to do. However, I am responsible for keeping my management updated and informed about the compliances. I want to have a clear knowledge of what exactly we can or can't do. Our new payroll manager and HR head, in the name of cutting down the company's costs, have suggested a few changes in the compliances and policies.
The foremost suggestion is to stop paying overtime to every employee. We will pay overtime only to two departments after the implementation of the revised overtime policy, and they want to pay normal wages for the extra hours worked, not as per the law, i.e., double the wages. Since we will not comply with the law, our manager has suggested changing the overtime pay head to productivity incentives or other allowances. For the rest of the employees, HR wants to give compensatory time off in lieu of the extra hours worked, instead of double wages.
I completely disagree with this approach because I know that by law, we have to pay double the wages for overtime and compensatory time off, in addition to normal wages for days off, and double wages on public holidays.
Do administration and HR personnel also receive overtime pay?
---
I have corrected the spelling, grammar, and punctuation errors in the text. The paragraphs have been properly formatted with a single line break between them. The original meaning and tone of the message have been preserved.
From India, Ludhiana
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Thank you all for your valuable advice.
Dinesh Divekar,
I myself am quite confused about what exactly my HR head is willing to do. However, I am responsible for keeping my management updated and informed about the compliances. I want to have a clear knowledge of what exactly we can or can't do. Our new payroll manager and HR head, in the name of cutting down the company's costs, have suggested a few changes in the compliances and policies.
The foremost suggestion is to stop paying overtime to every employee. We will pay overtime only to two departments after the implementation of the revised overtime policy, and they want to pay normal wages for the extra hours worked, not as per the law, i.e., double the wages. Since we will not comply with the law, our manager has suggested changing the overtime pay head to productivity incentives or other allowances. For the rest of the employees, HR wants to give compensatory time off in lieu of the extra hours worked, instead of double wages.
I completely disagree with this approach because I know that by law, we have to pay double the wages for overtime and compensatory time off, in addition to normal wages for days off, and double wages on public holidays.
Do administration and HR personnel also receive overtime pay?
---
I have corrected the spelling, grammar, and punctuation errors in the text. The paragraphs have been properly formatted with a single line break between them. The original meaning and tone of the message have been preserved.
From India, Ludhiana
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Dear Madam,
It is not known what your role/position is in the organization, and even if you agree with our views, how influential you will be in changing the mindset of the murky HR/Payroll Manager. However, it is heartening to see that you personally know and agree to toe the line of the law.
Regards,
Vinayak Nagarkar
HR and Employee Relations Consultant
From India, Mumbai
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It is not known what your role/position is in the organization, and even if you agree with our views, how influential you will be in changing the mindset of the murky HR/Payroll Manager. However, it is heartening to see that you personally know and agree to toe the line of the law.
Regards,
Vinayak Nagarkar
HR and Employee Relations Consultant
From India, Mumbai
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Speaking with fair amount of success in tackling OT and in dealing with Compensatory Off, (C.Off) I want to share some of my experiences:
1. OT is a disease and soon it becomes a matter of right for employees, many many unhealthy practices develop.
2. Instead of OT we developed a practice of giving C.Off and that too degenerated over a period of time.
3. We are an engineering industry and there are certain standard hours fixed for each manufacturing activity (like machining, welding, fitting etc) . Every workman has to give output worth 208 hours in every month. Because of increased efficiency as well as slackness in the standard hours fixed, many employees started producing output in excess by 20-30% every month and there was demand for some compensation. Mind you the entire work was normally finished within the normal working hours. So we introduced an incentive scheme and gave attractive amounts for working at more than 100% efficiency. There was no formal record of the C. Off earned and it was managed informally, by marking them as being present while they availed C. Off.
4. But during month end, quarter end and year end employees used to work on weekly off days and used to be compensated with C. Offs. Although initially the rule was to avail the C. Off immediately thereof, over a period of time the workmen used to accumulate them and avail it at their convenience. Many times this created problems and employees created scenes many times demanding C. Off as a matter of right for every small piece of extra work. So you have to be very cautious in implementing it.
5. Although the Section 59 of the Factories Act 1948 makes it mandatory that OT wages are payable for working in excess of 9 hrs per day or more than 48 hours per week, there is a judgement of AP High Court which states that there cannot be both OT as well as compensatory holiday. ( I will have to search for it, probably óf mid 80's. ) So applying that logic it has been possible to argue that where compensatory holiday is given for working on weekly off day, there is no need for payment of OT. Fortunately for us this matter never got challenged seriously in a legal manner as the employees in general were happy and everybody treated OT as anathema.
From India, Mumbai
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1. OT is a disease and soon it becomes a matter of right for employees, many many unhealthy practices develop.
2. Instead of OT we developed a practice of giving C.Off and that too degenerated over a period of time.
3. We are an engineering industry and there are certain standard hours fixed for each manufacturing activity (like machining, welding, fitting etc) . Every workman has to give output worth 208 hours in every month. Because of increased efficiency as well as slackness in the standard hours fixed, many employees started producing output in excess by 20-30% every month and there was demand for some compensation. Mind you the entire work was normally finished within the normal working hours. So we introduced an incentive scheme and gave attractive amounts for working at more than 100% efficiency. There was no formal record of the C. Off earned and it was managed informally, by marking them as being present while they availed C. Off.
4. But during month end, quarter end and year end employees used to work on weekly off days and used to be compensated with C. Offs. Although initially the rule was to avail the C. Off immediately thereof, over a period of time the workmen used to accumulate them and avail it at their convenience. Many times this created problems and employees created scenes many times demanding C. Off as a matter of right for every small piece of extra work. So you have to be very cautious in implementing it.
5. Although the Section 59 of the Factories Act 1948 makes it mandatory that OT wages are payable for working in excess of 9 hrs per day or more than 48 hours per week, there is a judgement of AP High Court which states that there cannot be both OT as well as compensatory holiday. ( I will have to search for it, probably óf mid 80's. ) So applying that logic it has been possible to argue that where compensatory holiday is given for working on weekly off day, there is no need for payment of OT. Fortunately for us this matter never got challenged seriously in a legal manner as the employees in general were happy and everybody treated OT as anathema.
From India, Mumbai
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Dear Madam,
KK-HR's post is an eye-opener in respect to the legally departed practice of treating OT as Compensatory Off (C-Off) and how it has degenerated into abuse and misuse beyond repair. It is a great learning from live experience, worth not repeating by any organization.
Regards,
Vinayak Nagarkar
HR and Employee Relations Consultant
From India, Mumbai
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KK-HR's post is an eye-opener in respect to the legally departed practice of treating OT as Compensatory Off (C-Off) and how it has degenerated into abuse and misuse beyond repair. It is a great learning from live experience, worth not repeating by any organization.
Regards,
Vinayak Nagarkar
HR and Employee Relations Consultant
From India, Mumbai
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Hi all,
The act was established in 1948, and at that time, workers were mostly unaware of the law. Nowadays, everyone is knowledgeable about the law, and workers are intentionally manipulating their overtime, which is beyond the supervisor's control. Let me provide a scenario:
For a shift requiring 3 persons and one reliever, once the shift is set, workers now plan to earn more wages as follows: Worker 2 will be absent, and Worker 1 will continue, receiving normal pay for 1 shift and extra shift overtime as per the rules. Then, Worker 2 will repeat the same on another day with Worker 3, and this cycle continues. The reliever will cover the general shift due to unplanned absences or when someone is on their day off.
This results in additional overtime payments to employees, which the supervisor cannot control, as workers deliberately do this two or three times a month.
Shifts planned and executed are as follows:
Su Mo Tu We Th Fr Sa
Worker 1 A A B B C C WO
Worker 2 B B C C WO A A
Worker 3 C C WO A A B B
Worker 4 WO G A G B G C
Su Mo Tu We Th Fr Sa
Worker 1 A+B A Abs B C C WO
Worker 2 Abs B C C WO A A+B
Worker 3 C C WO A A+B B Abs
Worker 4 WO G A+B G Abs G C
According to the plan, 28 mandays should be paid in a week, but in this scenario, 24 mandays and 32 OT hours at double wages are required, resulting in an extra 32 hours of wages. This cost increases significantly when extended to a month or other shifts.
While the HR team must control this, the blame falls on the HR for the rise in payroll costs, even though supervisors plan the shifts and HR is the final checkpoint.
To prevent this without using compensatory off, after incurring significant costs, we implemented Compensatory off to gain control by providing Compensatory off and introducing a general shift for the CO person as shown below.
Su Mo Tu We Th Fr Sa
Worker 1 A+B CO Abs B C C WO
Worker 2 Abs B C C WO A A+B
Worker 3 C C WO A A+B CO Abs
Worker 4 WO A A+B CO Abs B C
We still need to provide 8 hours of OT at double wages and 27 Mandays.
Please advise if we should proceed with Comp Off. If challenged, how should we address this unethical worker practice in a labor market with a shortage of workers?
Venkat.
From India, Kakinada
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The act was established in 1948, and at that time, workers were mostly unaware of the law. Nowadays, everyone is knowledgeable about the law, and workers are intentionally manipulating their overtime, which is beyond the supervisor's control. Let me provide a scenario:
For a shift requiring 3 persons and one reliever, once the shift is set, workers now plan to earn more wages as follows: Worker 2 will be absent, and Worker 1 will continue, receiving normal pay for 1 shift and extra shift overtime as per the rules. Then, Worker 2 will repeat the same on another day with Worker 3, and this cycle continues. The reliever will cover the general shift due to unplanned absences or when someone is on their day off.
This results in additional overtime payments to employees, which the supervisor cannot control, as workers deliberately do this two or three times a month.
Shifts planned and executed are as follows:
Su Mo Tu We Th Fr Sa
Worker 1 A A B B C C WO
Worker 2 B B C C WO A A
Worker 3 C C WO A A B B
Worker 4 WO G A G B G C
Su Mo Tu We Th Fr Sa
Worker 1 A+B A Abs B C C WO
Worker 2 Abs B C C WO A A+B
Worker 3 C C WO A A+B B Abs
Worker 4 WO G A+B G Abs G C
According to the plan, 28 mandays should be paid in a week, but in this scenario, 24 mandays and 32 OT hours at double wages are required, resulting in an extra 32 hours of wages. This cost increases significantly when extended to a month or other shifts.
While the HR team must control this, the blame falls on the HR for the rise in payroll costs, even though supervisors plan the shifts and HR is the final checkpoint.
To prevent this without using compensatory off, after incurring significant costs, we implemented Compensatory off to gain control by providing Compensatory off and introducing a general shift for the CO person as shown below.
Su Mo Tu We Th Fr Sa
Worker 1 A+B CO Abs B C C WO
Worker 2 Abs B C C WO A A+B
Worker 3 C C WO A A+B CO Abs
Worker 4 WO A A+B CO Abs B C
We still need to provide 8 hours of OT at double wages and 27 Mandays.
Please advise if we should proceed with Comp Off. If challenged, how should we address this unethical worker practice in a labor market with a shortage of workers?
Venkat.
From India, Kakinada
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Overtime.ppt
OverTime.xls
Overtime Form.doc