Hi All,
I have a query related to overtime by our workers. We are a small manufacturing company and have overtime almost on a daily basis in which some workers work for a few hours extra every day.
I understand that the labor law indicates that overtime should be paid at double the normal rate. I am not clear what the normal rate is. Whether it is only the basic salary or includes conveyance allowance and HRA as well? We do not have any DA for our workers.
Can someone please provide a reference to the relevant law and tell me how to calculate overtime in our case?
Thanks in advance, and I look forward to your reply.
Regards,
Renu
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1I have a query related to overtime by our workers. We are a small manufacturing company and have overtime almost on a daily basis in which some workers work for a few hours extra every day.
I understand that the labor law indicates that overtime should be paid at double the normal rate. I am not clear what the normal rate is. Whether it is only the basic salary or includes conveyance allowance and HRA as well? We do not have any DA for our workers.
Can someone please provide a reference to the relevant law and tell me how to calculate overtime in our case?
Thanks in advance, and I look forward to your reply.
Regards,
Renu
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hi As per our company policy OT has to be pay on total salary .. the formula is as under. OT = Basic+DA+HR+LTA+MED+Conv / 8 Hrs X No. of hrs OT done. Hope this will help u... Best regards Sunil Malla
From India, Mumbai
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From India, Mumbai
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Please ignore my earlier comment.
As per our company policy, overtime (OT) has to be paid based on the total salary. The formula is as follows:
OT = (Monthly Salary / 30 Days / 8 Hrs) x Number of hours of OT done.
Hope this will help you.
Best regards, Sunil Malla
From India, Mumbai
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As per our company policy, overtime (OT) has to be paid based on the total salary. The formula is as follows:
OT = (Monthly Salary / 30 Days / 8 Hrs) x Number of hours of OT done.
Hope this will help you.
Best regards, Sunil Malla
From India, Mumbai
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Hi. In our company we are calculate OT rate as below OT Rate = Basic + DA + HRA = Total = Total / 26/8*2 Regards Vrusha
From India, Chakan
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From India, Chakan
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I am working in a manufacturing company. As per our rules and regulations, the overtime calculation is based on BASI + DA + HRA + CON. If it is below 4 hours, then half of their ordinary rate of wages is paid. If it is above 4 hours, then it is calculated at the rate of 1 day's wages.
From India, New Delhi
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From India, New Delhi
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Thank you for all your replies.
I have a further question. In our company, the overtime (OT) rate is very high. If OT is to be paid at double the normal rate - considering basic, House Rent Allowance (HRA), and conveyance allowance as the normal rate - then it would amount to a significant sum of money.
Is it possible to introduce a special allowance for our workers to lower their normal rate? In such a scenario, can OT be paid based only on the remaining normal rate, excluding the special allowance?
For instance, if the normal rate is X and the Special Allowance is Y, the adjusted normal rate would be X-Y. Can OT be paid at double the rate of X-Y without factoring in Y?
I would greatly appreciate your prompt response.
Regards,
Renu
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I have a further question. In our company, the overtime (OT) rate is very high. If OT is to be paid at double the normal rate - considering basic, House Rent Allowance (HRA), and conveyance allowance as the normal rate - then it would amount to a significant sum of money.
Is it possible to introduce a special allowance for our workers to lower their normal rate? In such a scenario, can OT be paid based only on the remaining normal rate, excluding the special allowance?
For instance, if the normal rate is X and the Special Allowance is Y, the adjusted normal rate would be X-Y. Can OT be paid at double the rate of X-Y without factoring in Y?
I would greatly appreciate your prompt response.
Regards,
Renu
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Hi Brijesh,
If you believe that the overtime rate at your company is very high, then you can stop the overtime and implement an internal policy as follows:
1) Overtime should be closed above 12,000/-
2) For amounts above 12,000/-, pay an incentive as follows: 2 hours = 25 Rs, 5 or 6 hours = 100/-. If not, follow this policy.
3) I have observed that many export houses do not pay overtime at a double rate. As per legal requirements, overtime should not exceed 48 hours in a quarter. Each person should show 16 hours on the actual salary sheet and be paid double the rate of wages for those hours, with the remaining overtime paid at a single rate of wages.
Daily wage overtime calculation formula: Gross salary/8 x no. of hours, if double x 2
Monthly salary overtime calculation formula: Gross salary/208 x no. of hours, if double x 2
Regards,
Brijesh
From India, Gurgaon
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If you believe that the overtime rate at your company is very high, then you can stop the overtime and implement an internal policy as follows:
1) Overtime should be closed above 12,000/-
2) For amounts above 12,000/-, pay an incentive as follows: 2 hours = 25 Rs, 5 or 6 hours = 100/-. If not, follow this policy.
3) I have observed that many export houses do not pay overtime at a double rate. As per legal requirements, overtime should not exceed 48 hours in a quarter. Each person should show 16 hours on the actual salary sheet and be paid double the rate of wages for those hours, with the remaining overtime paid at a single rate of wages.
Daily wage overtime calculation formula: Gross salary/8 x no. of hours, if double x 2
Monthly salary overtime calculation formula: Gross salary/208 x no. of hours, if double x 2
Regards,
Brijesh
From India, Gurgaon
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Hi,
Overtime (OT) is to be paid double the salary. For OT salary calculation: Basic + DA only, not any other allowances that are paid to the employee. The calculation should be as follows: Basic + DA / 26 days = per day wage, Per day wage / 8 Hrs = Per Hr Wage, Per Hr wage X No of OT Hrs X 2 times = OT wage. OT should not be given arbitrarily; considering that we are dealing with human beings, rest is essential after every 8 Hrs of work. Moreover, the energy levels in an employee decrease with each passing hour. It is unreasonable to expect the same level of productivity after 8 Hrs of continuous work compared to the initial hours of duty.
According to the factories act, if an employee works for more than 48 Hrs in a week, OT should be given for the extra hours exceeding 48 Hrs. If OT is a regular necessity, it might be more cost-effective to hire new employees to ensure full-fledged work output instead of incurring the additional cost of paying double the salary through OT payments.
Mohan Rao
Manager HR
From India, Visakhapatnam
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Overtime (OT) is to be paid double the salary. For OT salary calculation: Basic + DA only, not any other allowances that are paid to the employee. The calculation should be as follows: Basic + DA / 26 days = per day wage, Per day wage / 8 Hrs = Per Hr Wage, Per Hr wage X No of OT Hrs X 2 times = OT wage. OT should not be given arbitrarily; considering that we are dealing with human beings, rest is essential after every 8 Hrs of work. Moreover, the energy levels in an employee decrease with each passing hour. It is unreasonable to expect the same level of productivity after 8 Hrs of continuous work compared to the initial hours of duty.
According to the factories act, if an employee works for more than 48 Hrs in a week, OT should be given for the extra hours exceeding 48 Hrs. If OT is a regular necessity, it might be more cost-effective to hire new employees to ensure full-fledged work output instead of incurring the additional cost of paying double the salary through OT payments.
Mohan Rao
Manager HR
From India, Visakhapatnam
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hi, OT calculation is very simple 1.Gross Salary * OT hrs /104 (for double rate) 2.Gross Salary*OT hrs /208 (for single rate) Rajesh Tripathi LDK Pantnagar
From India, Kashipur
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From India, Kashipur
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Dear Brijesh,
I'm working in Adani Group as an HR Executive. Could you please clarify the OT calculation process for me? I would also like to have your cell phone number.
As per my understanding, OT should be calculated based on Basic + D.A. and not any other components of the pay structure.
Regards.
From India, Kota
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I'm working in Adani Group as an HR Executive. Could you please clarify the OT calculation process for me? I would also like to have your cell phone number.
As per my understanding, OT should be calculated based on Basic + D.A. and not any other components of the pay structure.
Regards.
From India, Kota
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