Dear Sir/Madam,
I work as an HR in an IT firm with fewer than 30 employees. We used to pay the employees an extra salary based on their hours of work when they stayed in the office to fix code issues based on the gross salary. These employees include the manager cadre also. Recently, management told us that instead of paying an extra amount, we can do a compoff. In India, we won't pay extra payments to managers. How should we handle this situation? I feel guilty that I didn't research this before and report it to them. Kindly guide. Now, I'm supposed to create a policy.
Thanks and Regards,
From India, Madras
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4I work as an HR in an IT firm with fewer than 30 employees. We used to pay the employees an extra salary based on their hours of work when they stayed in the office to fix code issues based on the gross salary. These employees include the manager cadre also. Recently, management told us that instead of paying an extra amount, we can do a compoff. In India, we won't pay extra payments to managers. How should we handle this situation? I feel guilty that I didn't research this before and report it to them. Kindly guide. Now, I'm supposed to create a policy.
Thanks and Regards,
From India, Madras
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Overtime payment for extra hours worked is a mandatory provision under labor law in India. However, that does not apply to managers who have managerial powers. Although overtime at double the rate is applicable for extra hours beyond 48 hours a week, in respect of establishments which work for less than 48 hours in a week, it should be paid beyond the scheduled working hours. If you have 9 hours per week and 45 hours per week, then overtime should be paid for each hour exceeding 45 hours per week.
Compensatory off is available for working on holidays, along with overtime payment. There is no provision under the labor law which states that each extra hour worked shall be accumulated, and a compensatory holiday equal to those extra hours worked shall be given to the employees. Therefore, if the employees agree that instead of getting paid for the extra hours they work, they get a compensatory off, then you can proceed with it. It should be introduced after taking the employees into confidence. It may be acceptable to those who would like to have long weekends, but not fair for those who need more take-home money.
From India, Kannur
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Compensatory off is available for working on holidays, along with overtime payment. There is no provision under the labor law which states that each extra hour worked shall be accumulated, and a compensatory holiday equal to those extra hours worked shall be given to the employees. Therefore, if the employees agree that instead of getting paid for the extra hours they work, they get a compensatory off, then you can proceed with it. It should be introduced after taking the employees into confidence. It may be acceptable to those who would like to have long weekends, but not fair for those who need more take-home money.
From India, Kannur
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Dear Madhu sir,
Thank you for your guidance. I understand from the message that as per the labor law, overtime payment is mandatory in India. However, I received a message stating, "According to the Kerala Shops and Establishment Act, IT companies are exempt from overtime and spread-over regulations as per the state government's notification under the IT Rules, 2002. Therefore, employers are not required to pay extra for overtime work in IT companies. However, compensatory offs are applicable to all companies, and there are no restrictions for employees to avail themselves of comp-off." Is this statement true?
From India, Madras
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Thank you for your guidance. I understand from the message that as per the labor law, overtime payment is mandatory in India. However, I received a message stating, "According to the Kerala Shops and Establishment Act, IT companies are exempt from overtime and spread-over regulations as per the state government's notification under the IT Rules, 2002. Therefore, employers are not required to pay extra for overtime work in IT companies. However, compensatory offs are applicable to all companies, and there are no restrictions for employees to avail themselves of comp-off." Is this statement true?
From India, Madras
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Also, i missed to add the point that , company is located at kerala.
From India, Madras
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From India, Madras
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Though the concept of 'compensatory off' in lieu of OT payment is not recognized under Indian labor legislations, some sort of 'French leave' kind of adjustments are in vogue in many establishments, at least at the 'shop floor levels' or 'HOD' levels if not at the company level as a policy. I remember in our company, we adopted this method at HOD levels, which is not accounted for in the legitimate leave accounts such as PL/EL. However, I know in some establishments, it's accommodated by converting those OT hours into special CL. This is being operated as some sort of working arrangements among the HODs and the colleagues downstream. It is common among supervisors upwards, if not at workmen levels, where either OT or certain incentive schemes (in lieu of OT wages), wherever possible on a 'piece rate' basis, are being followed with the tacit working arrangement with workmen or unions.
However, I believe no legal authorities are going to interfere if any establishment initiates formulating a leave category for managerial personnel as a compensation tool for extra hours of work. But the fact remains the first choice for employees is going to be monetary compensation or in-kind benefits like picnics, foreign tours, etc.
From India, Bangalore
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However, I believe no legal authorities are going to interfere if any establishment initiates formulating a leave category for managerial personnel as a compensation tool for extra hours of work. But the fact remains the first choice for employees is going to be monetary compensation or in-kind benefits like picnics, foreign tours, etc.
From India, Bangalore
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Your understanding that IT companies are exempt from overtime and spread-over regulations is wrong. The IT policy grants permission for flexi-timing, allowing women to work during the night, etc., and there is no dilution concerning working hours. It is a general perception that IT is an industry beyond the scope of labor laws, leading to the wrong perception that employers can let employees work for 10 to 12 hours a day without paying overtime wages. The employees are equally unaware that they are considered workmen falling under the scope of the Industrial Disputes Act. This misinterpretation of the law leads them to not demand overtime wages as well.
From India, Kannur
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From India, Kannur
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Realistically, the majority of employees in the IT/ITES sector perceive themselves as not falling under the category of 'workmen' since they primarily perform their tasks using computers or laptops. Additionally, there is limited union representation, with only a few groups and top-tier organizations involved, rather than widespread coverage extending to lower-level employees. Furthermore, flexible timings and work-from-home arrangements are prevalent. These factors likely contribute to the absence of an overtime (OT) regime in this industry.
From India, Bangalore
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From India, Bangalore
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Indian Labour laws.doc
Labor Laws Modified.pdf