The Factory Act says:
a) as per Sec 59(1), it has to be paid on "ordinary rate of wages"
b) Sec 59(2) defines ordinary rates of wages as basic wages plus such allowances as the worker is entitled for the time being excluding bonus & wages for overtime.
My questions are:
1) Is overtime in factories to be calculated on the basis of Basic+DA or we have to take all allowances into consideration.
2) Is there any case law/ruling which states that Overtime is only on Basic and/or DA.
Experts may throw some light on this subject.
Thanks in advance for your help

From India, Aurangabad
Industrial Relations And Labour Laws
Executive Human Resource At Emcure Pharmaceuticals
Hr Officer
Consultant & G.m.
+4 Others

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Hi Sunnydays, OT can be paid on only basic+DA, and not rule to consider other allowances exept food allowances.
From India, Kolhapur

Dear All, (OT paid on Basic+DA+Special Allowance+Cash value of subsidised food) and any other allowance except conveyance allowance and HRA. hope this will clear the confusion.
From India, Mumbai

Dear friends, The attached judgment of the Madras HC provides for inclusion of allowances also for computation of OT allowance, pl.note. kumar.s.
From India, Bangalore

Attached Files (Download Requires Membership)
File Type: doc OVER TIME PAYMENT-wages under the Factories Act - Madras HC judgment.doc (28.5 KB, 5031 views)


As per the Act and Madras HC’s decision In factories OT wages should be calculated taking all allowances except those excluded u/s 59 . VARGHESE MATHEW
From India, Thiruvananthapuram

Recently PF has insisted that basic wages include all to which an employee is entitled by presenting himself for work. He includes She. This is socially correct also. Certain allowances e.g. HRA, Conveyance, is same whether employee works regular hours or overtime or short leave. On these overtime need not be paid. But when an employee is on paid leave, what all he earns are his Basic Wage and overtime needs to be paid on that wage.
In my observations various allowances were started to avoid PF, Bonus, Gratuity, overtime, etc payments which are called indirect. I wonder how unions accept or accepted these allowances? Why did they not insist on homes rather than house rent allowance, why did they not insist on education rather than education allowance, conveyance rather than conveyance allowance and so on for all allowances. It is our short sight that we went on converting everything in money and now landed in such dilemmas.
Vibhakar Ramtirthkar.

From India, Pune

Ordinary wages also does not includes amount of bonus & overtime as mentioned in the in Chapert VI(59) of Factory act. Anand
From India, Mumbai

Different enactments have given different definition to the word wages. But one thing is common to all and that is, basic wages and dearness allowances. Since overtime is paid for the work extended beyond one's scheduled working hours, the compensation for that extended working hours, ie, overtime payment, should be calculated on the daily average of wages including all allowances to which he is entitled. The simple way to decide is the wages to be deducted if he is on leave without pay. If one takes one LOP, naturally we will deduct one day salary from his monthly pay and that should be the basis for calculating OT wages. The daily wage shall be divided again by 8 hours to arrive at hourly rate of wages.

Daily rate of wages shall not include any allowance which is paid based on attendance. For example, for attending night shift there can be a night shift allowance and that is taken out of wages. Similarly, if conveyance allowance is not a fixed sum per month but is based on number of days work attended that can also be excluded from wages. This is because for attending a day's work of 8/9 hours, he is paid one conveyance allowance which is sufficient even if he is working for 10/12 hours.



From India, Kannur
Need help regarding, attendance award, during in deduction of ESIC, attendance award could be included or excluded.
From India, Bangalore

Attendance bonus paid on a monthly basis will attract ESI whereas the same paid quarterly, half yearly or annually based on the attendance in the respective period will not attract ESI. Simply, all allowances which are paid in an interval of more than 2 months will not be considered for ESI deduction

From India, Kannur

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