Dinesh Divekar
Business Mentor, Consultant And Trainer
Labour Law & Hr Consultant

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Dear Professionals,
Could you please guide me on payment in lieu of overtime worked by the employees in a restaurant? Restaurant is quite fair and just, but just to avoid the hassles attached with the OT, it wants to make alternative mode of payment for the overtime worked?

Dear Meenakshi,

The information given is little inadequate to give proper comments. Are you from HR are you are the owner of the restaurant? Restaurant staff works how many hours extra so that they become eligible for overtime (OT) payment? What hassles do you foresee in payment of OT? In few restaurants staff work anything between 12 to 16 hours. Does it happen in your restaurant also?

You may keep track of extra working hours of the staff and pay them "performance bonus". However, it could come under the scanner of the labour authorities also as if some employees works for 12 hours then on each working day, he will become eligible for half-day's performance bonus.

The another alternative could be five day work week. However, in the restaurant business this is quite impossible.

Lastly, in the hospitality industry, payment of OT is little rare. When the employee is taken on board, it is assumed that he is expected to work for 12-14 hours and generally no OT is paid. Why your restaurant is exception to this norm?


Dinesh Divekar

Dear Meenakshi Gupta,

Would have been better had you mentioned the location of the restaurant. The question in the second part of your post is not clear as suggested by Dinesh - whether you want an alternative to the system of overtime work or simply an alternative mode of payment for overtime work. Whatever the type of clarification sought for, I am sure that you are fully aware of the concept of overtime work by employees and both the need for and the scale of compensation in this regard. Restriction of working hours to 8 hrs a day and 48 hrs a week is the first convention of ILO, If I remember correct. The amount of time the employee works at the instance of the employer beyond normal working hours is, therefore, called as " Over Time" in employment parlance. Apart from the Minimum Wages Act,1948, a monetary labour legislation, the Contract Labour ( Regulation & Abolition) Act,1970 and the Building and Other Construction Workers ( Regulation of Employment Service) Act,1996, labour legislations dealing with special type of indirect/ adhoc labour, Establishment-oriented labour legislations viz.,Factories Act,1948, Mines Act,1952, Working Journalists ( Conditions of Service) Miscll Provisions Act,1955, the States' Catering Establishments Acts etc, invariably provide for overtime work and the mode of compensation for it. Almost all these enactments except the Working Journalists Act prescribe only monetary compensation at twice the rate of normal wages; only rule10 of the Working Journalists Act prescribes compensatory rest hours equal to the overtime hours worked beyond 6 hrs in day shift and beyond 5 1/2 hrs in night shift. Genarally reduction in overtime work will result in more employment and more leisure to the existing labour at the end of normal workday. But exigencies of work can necessitate the adoption of overtimework. Hence there is justification for compensation @ twice the normal wages. Whatever the alternative mode of compensation like the one hesitantly suggested by Dinesh should not be in effect lesser than the statutorily prescribed compensation. Taking into consideration of practical factors peculiar to your restaurant like the types of menu, times of serving, restrictions on service time by Public Authorities like Police etc, you may decide the possiblity of shift working to minimize the incidence of overtime work.

Dear Sir,
Please elaborate what is the alternative of OT hours. in Shops & establishment Act location Noida. As there is constraint of 50 Hrs per Quarter & employees are working more that 5o hrs, so management do not want to pay double the wages & finding out alternative way so that compliance can also be meet.

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