Overtime Payment Rules in India

Overtime is the amount of time someone works beyond normal working hours; these may be
determined or mentioned under various Acts which are applicable for the functioning of that
organization. Below given are Acts that have different provisions for overtime payment and their
contravention.

Minimum Wages Act, 1948

• Sec. 14 of the Act mentions that any worker whose minimum rate of wages are fixed with wage
period of time, such as by hour, by the day or by any such period and if a worker works more than that
number of hours, it is considered to be overtime. In case if the number of hours constituting a normal
working day exceeds the given limit, then the employer will have to pay him for every hour or for part
of an hour for which he has worked in excess at the overtime rate.

• As per the Act it is compulsory to maintain registers and records as Register of Overtime –Form IV.
This Register of Overtime contains various details such as name of employee, hours of overtime, date
and other such details which are necessary for the records.

• Contravention of any provisions pertaining to fixing hours for normal working day etc., will be
punishable with imprisonment up to 6 months or with fine up to Rs.500.

Factories Act, 1948

• Under Sec. 51, 54 to 56 & 59 of the Act details are mentioned regarding the working hours, spread
over and overtime.

• Under Sec. 59 it is mentioned that where a worker works in a factory for more than 9 hours in any
day or for more than 48 hours in any week, he/she shall, in respect of overtime work, be entitled to
receive wages at the rate of twice his/her ordinary rate of wages.

• If in any factory there is any contravention of any of the provisions of this Act or of any rules made
there under or of any order in writing given there under, the occupier and manager of the factory shall
each be guilty of an offence. If found guilty, they will be punishable with imprisonment for a term which
may extend to 2 years or with fine which may extend to one lakh rupees or with both. Even then if the
contravention is continued after conviction, then will be punishable with a further fine which may extend
to one thousand rupees for each day on which the contravention is so continued.
Overtime

‘Overtime’ means working time in excess of regular working time.

When calculating overtime, compensatory rest periods or other rest periods that are
scheduled during the employee’s regular working time or on-call time shall be treated
as regular hours worked or time spent on call. Act (2000:766).

When there is a special need to increase the number of hours worked, overtime may
be worked up to a maximum of 48 hours per employee over a period of four weeks, or
50 hours over a calendar month, with a maximum of 200 hours over a calendar
year(general overtime)

Overtime in excess of general overtime may be worked up to a maximum of 150

hours per employee over a calendar year if there are special grounds for doing so and
no other reasonable solution has been possible (extra overtime).
Together, extra overtime and general overtime may not exceed 48 hours per employee
over a period of four weeks, or 50 hours over a calendar month.

Overtime refers to the time worked in excess of ones’ regular working hours which, in
India, is eight to nine hours per day and forty eight per week. If a person works for
longer than the regular working hours, that person is eligible to receive remuneration for
that period, which will be twice the persons’ normal wage.

Overtime Laws in India

Several statutes regulate overtime and overtime payment, and different legal acts
provide for respectively different periods of working hours. However, the working hours
prescribed under the Factories Act, 1948 is taken as a standard period. Under Section
51 of the Factories Act, employees are not supposed to work for more than 48 hours in
a week, and under section 59, for not more than nine hours a day. The time worked in
excess of these 48 hours per week and nine hours per day will be counted as overtime
under the Act and will require the employer to pay workers twice the standard wage.
Section 14 of the Minimum Wages Act, 1948 states that after an employee is paid his or
her minimum wage for a fixed period, they are required to be paid extra as an overtime
rate.

The Factories Act, 1948 restricts the employment of women between 7:00 pm and 6:00
am, which can be relaxed by the Chief Inspector of factories in certain cases. If such a
relaxation of stipulated working hours exceeds the normal period of working hours,
employees will be eligible for overtime compensation. Even then, this relaxation is still
time sensitive, that is, women cannot be required to work between 10:00 pm to 05:00
am.

Under the same Act, Section 75 specifies that no child below 14 years of age can be
employed in any factory. A child above fourteen who is eligible to work in a factory
cannot be allowed to work for more than four and a half hours in a day and cannot work
between 10:00 pm and 6:00am. In addition, a female child is not allowed to work in any
factory, except between 8:00 am and 7:00 pm.

Procedure for Overtime

A notice of period of work, in English and local language should be displayed at some prominent
place. No worker shall be required or allowed to work in any factory otherwise than in accordance
with the notice of periods of work displayed in the factory. Copy of notice of period in duplicate and
any change is to be sent to the Inspector. Therefore, although, no direct procedure for overtime has
been laid out, it becomes mandatory that work periods are notified. Moreover, for overtime, the
consent of the worker would be required as the law prohibits the employer to require a worker to
work in a factory for more than forty-eight hours in any week and nine hours in a day, unless notified
by the state government.

For the contract labourers, as per the Contract Labour Act, 1971 a notice showing the place and time
of disbursement of wages, rate of wages, hours of work, wage period, dates of payment of wages,
name and addresses of the Inspector having jurisdiction and date of payment of unpaid wages should
be displayed in the premises in the local language understood by majority of the contract labourers.

Overtime Wages
If workers work for more than 9 hours a day or more than 48 hour a week, extra wages should be
given at twice the ordinary rate. For agricultural labour under the Plantation Act, this is extended to
54 hours a week as the norm, rather than 48 for factory work.

Total working hours including overtime should not exceed 60 hours in a week and total overtime
hours in a quarter should not exceed 50. Register of overtime should be maintained. An employee
working outside the factory premises like field workers etc. on tour outside headquarters are not
entitled to overtime.

Working Hours for Non-Factory Workers

The Shops and Establishment Act (“SEA”), which is a state legislation and each state has framed its
own act and rules for the act, regulates the working hours of non-factory workers i.e., shops and
establishments. SEA is applicable to all the employees (including managerial and non-managerial
workers) of any shop of establishment covered under it. SEA also fixes the maximum number of work
hours to 9 hours a day and 48 hours a week. The work hours may be increased up to 54 hours a week
with prior notice to the local labour inspector subject to the condition that overtime work hours do
not exceed 150 in one year. In line with the Factories Act, the SEA also requires payment of wages at
twice the rate of regular wages. Similarly, the rest and substitute holiday provisions under the SEA
are in line with the provisions of the Factories Act unless state governments have changes to their
respective SEAs. The law does not really differentiate between managerial and non-managerial
workers when it comes to regulations relating to working hours. However, it is a common practice
that employees (management level and other white collar employees) rarely make any demands or
are paid any overtime wages, although legally entitled to.

Penalties

The Factories Act provides for penal consequences for contravention of provisions of the act; any
violation of overtime regulations under the Factories Act is punishable with imprisonment for a term
which may extend to two years or with fine which may extend to one lakh (one lakh = 100,000)
Rupees or with both, and if the contravention is continued after conviction, with a further fine which
may extend to one thousand Rupees for each day on which the contravention is so continued. The
penalties under the SEA depend on the specific laws of the states but in general are very low (as low
as Rs. 100 in case of some states) in comparison with the penalties under the Factories Act.
Basis of Calculation of Overtime-

For the purpose of this section “ordinary rate of wages” means the basic wages plus such
allowances, including the cash equivalent of the advantage accruing through the supply of
meals and the concessional sale to employees of food-grains and other articles, as the
employee is for the time being entitled to, but does not include bonus.