rains13 Started The Discussion:
I have a query related to overtime by our workers. We are a small manufacturing company and have overtime almost on daily basis in which some workers work for few hours extra everyday.
I understand that the labour law indicates that overtime should be paid at double the normal rate. I am not clear what normal rate is. Whether it is only basic salary, or includes convenyance allowance and HRA as well? We do not have any DA for our workers.
Can someone please give refernce to the relvant law and tell me how to calculate overtime in our our case?
Thanks for your in advance and I look forward to your reply,
Please ignore my earlier comment..
As per our company policy OT has to be pay on total salary .. the formula is as under.
OT = Monthly Salary / 30 Days / 8 Hrs X No. of hrs OT done.
Hope this will help u...
Thanks for all your replies.
I have a further question- in our company the OT is very high and if OT to be paid at double the normal rate- considering basic, HRA and con. all. as normal rate, then it would be a lot of money.
Can we have a special allowance kind of thing for our workers to reduce their normal rate? In such case, can OT be paid only on the remaining normal rate without including that special allowance?
Example- Normal rate is X. Special Allowance is Y, so now the normal rate becomes X-Y. Can OT is paid at double the rate of X-Y without paying anything on Y?
Your earliest response will be highly appreicated.
If you think that your company the ot rate is very high then you stop the ot and make internal policy as :-
1) Ot closed obove 12000/-
2) above 12000/- pay incentive, as 2hrs = 25Rs 5or6 hr = 100/- this type other wise
3) I saw in many export house they do not pay ot at double rate. As per legal requirment ot will not be excess 48 hours in Quarter. Every person show 16 hrs on actual salry sheet and pay double rate of wages and balance ot pay single rate of wages.
Daily wages Ot Calculation formula = Gross salary/08x no. of hrs if double x2
Monthly salry Gross salry /208xno. of hrs if double x2
OT to be paid double the salary.
for OT salary = Basic + DA only not any other allowences that are paid to the employee.
calculation : 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 not to be given as you like, after all you are dealing with human being, rest is must after every 8 Hrs of work. More over the energy levels in employee depreciates for every Hr. what can you expect from the employee to work after completion of 8 Hrs of work. He or she can not give you complete work as he give in the first few Hrs of duty.
In a week an employee worked for No. of Hrs, more than 48 Hrs, OT to be given for the extra Hrs which are over and above 48 Hrs, as per the factories act.
If the OT is a regular and must, you better go for a new recrutement and get full pledged work as you desire at a single day salary / wage, and you can save money by not paying double the salary by way of OT payments.
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