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To give you reply, we need little more information. Can you please confirm what is your final product, how many employees work on shop floor and how many are paid the overtime (OT)? Since when are you paying OT? What is the per cent of OT against total wage bill? Compared with regular production hours, how many hours workers do extra work?
Have you studied the causes of the production downtime during regular production hours? If yes, what per cent is the downtime and have you done analysis of the downtime? Have you done the analysis of the time spent on rework? What per cent forms the rework against total work?
We do not know your production process therefore, it is difficult to provide comments on payment of OT. However, human as well as machine productivity depends on the following factors:
a) Conducting time and motion studies
b) Proper Material Resource Planning
c) Coordination amongst Sales, Production and Purchase department
d) Proper maintenance of the machines used
e) Availability of the spares for the maintenance
f) Availability of the raw material
g) Paying the vendors in time, ensuring that they do not stop supply of the material for want of clearance of their past invoices
h) Implementation of the Operations Research techniques in production
i) Employing right-skilled employees
j) Giving premium to the quality work, doing the right thing first time and thereby reducing rework
If you work on the above points, possibly your workers may not need to spend excess time beyond working hours. Our objective should be to improve scientific work practices and thereby make redundant payment of OT. Above all how do you measure the productivity of the various departments? Which ratios do you use to measure the productivity? For further queries, feel free to contact me.
8th June 2017 From India, Bangalore
8th June 2017 From India, Bengaluru
Your Query: "I am working with an engineering company. We have a practice of giving overtime pay to employees of some grades/levels. Now, what we have observed that employees are staying back just to get OT pay without much work in hand. How can we stop this? Any suggestion? Or can we just stop this practice suddenly? are there any repercussions that we need to consider in terms of legality?". Pune, 8.6.17, Asmita
Solution: Payments for Overtime Work is categorically for the "Work due to the exigency of that assigned work to be done beyond normal 8 Hours-shift Work/Duty and it is governed by the laid down Law in this regard.
The Law prescribes that the Data regarding OT Work is reported to the Inspectorate/Govt Authority and the stipulated OT Limit is not violated withpout express permission of the said Authority. There is No Blanket sanction /Exemption granted to Employers to keep their Workers on Over Time Work.
Overtime Work is purely Business-Need-based. As such, OT Payments or allowance are neither in the nature of ex-gratia nor "negotiable" and any Malpractice in this respect must forthwith be discontinued irrespective of its continuance for any period of time failing which its unlawful, unauthorized misuse shall be deemed as violation of the Laws and Penalities imposed on the Employer.
Further, whereas such a malpractice as aforesaid, remains Unlawful, it also is Unfair to all stakeholders of the Industrial Establishments such as yours and is likely to vitiate the IR Scenario in the neighbourhood undertakings.
Invite the Union, in case your Undertaking has one duly Registered and Recognized by your Employer, discuss with them and sort out and arrive at a Settlement if needed and do away with the Unhelpful Practice.
By the by, please urge upon your Managers/SupervisoryStaff to " manage" the Work; the Workplace and the Workers in Professional manner and obey the Laws applicable.
Laws ask None if s/he would comply, that is Not the Choice; the Choice is "How" - with or without Legally Imposed Penalties.
Someday, the Laws will take notice of the aforsaid "Violation" and come down heavily and as we now know our Judiciary shall always Uphold the Rule of Law irrespective of repurcussions.
And, remember our Advice ..." Anything Worth Doing is Worth Doing, WELL"
Kritarth Team of Seasoned IR Professional Practioners are always available to Help / Guide, every stage of implementing " the Solution".
9th June 2017 From India, Delhi
Apart from legality, I think there is something worth thinking upon. If Overtime practice prevails since beginning, it is not advisable to stop all of a sudden - from the staff's morale point of view. Suggest to, take steps slowly.
However, think and review the reason first why you want to stop it - is it because of financial reasons, is it because of no sizable volume of work at present or not going to be for a longer span ? Do you think this overtime attitude will be curtailed upon the suitable instructions by Management or HR ? You have to think from both the angles. Tomorrow it should not happen, company will have tremendous workload but no person will be ready to put in extra hours to finish it, which will hamper the projects. Do you think educating or directing them to finish given tasks in the given time will help ? You are the best judge!
Upon the review, if it emerges that Overtime should be stopped - involve HODs in the discussion how they will contribute in handling their team and supporting the decision. This way, alone HR will not have to face the music.
9th June 2017 From India, Pune
Firstly, please help clearing few doubts:
1). How many Employees are working for OT?
2). What is their Productivity level during OT (if can be measured)?
3). Are their work area is under Camera range?
4). Is it Target based work?
Find work tracking ways for the OT group VS their productivity.
Probably, after getting my question's answer I can advice something on the matter.
9th June 2017 From India, Ahmadabad
#AnonymousPlease see whether Factories Act or Shops and Commercial establishment Act is applicable. If so OT payment beyond the period stipulated in the act is statutory. But you have the right not to engage beyond the period specified
10th June 2017 From India, Bangalore
2. In some companies workmen stay back for OT as some times there is connivance between the workmen and the supervisory staff and the workmen stay back.
3. You need to check as to who issues instructions to workmen to stay for OT? That person has to be clearly instructed on the subject.
10th June 2017 From India, Thane
14th June 2017 From India, Chennai