Labour Law & Hr Consultant
Partner - Risk Management
Hr Manager
Srinath Sai Ram
Hr Manager
+1 Other

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Dear sir/madam,
I observed that most of organization calculate overtime with salary formula of /26/8 * ot hrs * 2.
I want to know is this formula mentioned in factory act or minimum wage act or any other act of labour law?
if yes, than can i know this provision?
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Dear Mitesh makwana, Please note that OT Payment is paid@ double Rate on Gross Salary.Please refer to Minimum Wages NOTIFICATION Applicable to your Establishment for clarity
Yes, there is a specific provision in factories act (read sec 52 to 58) that gives howmthe computation is to be done.
Most employers take 26 working days since 4 Sundays are in a month. So they divide the monthly salary by 26 to get daily salary. Then that is divided by 8 hours to get hourly rate. Overtime is to be paid at double of this rate
Overtime is double the wages( basic + DA) , not double the gross salary
Where did you get that information from ?
Please do not put any thing that is not supported by the law of the land, or specifically against what is actually in the law
Dear Mitesh,
Juxtaposing the Minimum Wages Act,1948 and the Factories Act,1948 regarding the issue of overtime payment, you can find the saving clause under sub section (2) of section 14 of the Minimum Wages Act,1948 prohibiting the prejudicial operation of the provisions of section 14 wherever sec.59 of the Factories Act,1948 is applicable.
Coming to the observation of Sebastian, it is not correct to take into account the components of basic and D.A only in computing the over time rate of wages in view of the meaning assigned to the term "ordinary rate of wages" u/s 59 (1) of the Factories Act,1948.
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