Dear All,
As per the Factories Act 1948, the calculation of overtime wages is as follows:
Up to 9 hours per day or 48 hours per week, the rate is normal. Beyond that, the rate will be doubled.
Accordingly, calculate the difference between the scheduled working hours and the hours specified above. For the difference, the OT payment will be at a single rate and double for any excess hours. If there is a difference in the calculation on a daily and weekly basis, the employee should be paid based on whichever is more beneficial to them.
For example: A company works 6 days a week with a uniform working time of seven and a half hours per day (8 hours including a 30-minute break). Suppose a worker works an extra 2.5 hours, totaling 10 hours in a day, with a per hour remuneration of Rs. 30. The overtime payment calculation will be as follows:
1) Daily basis: Scheduled time - 7.5 hours
OT time @ normal rate - 9 - 7.5 = 1.5 hours
OT payment - 1.5 x 30 = Rs. 45 - (A)
OT time @ double rate - 10 - 9 = 1 hour
OT payment - 1 x 30 x 2 = Rs. 60 - (B)
Total - 45 + 60 = Rs. 105
2) Weekly basis: Scheduled time - 7.5 x 6 = 45 hours
OT time @ normal rate - 47.5 - 45 = 2.5 hours
OT payment - 2.5 x 30 = Rs. 75 - (A)
OT time @ double rate - 47.5 - 48 = N/A
OT payment - 0 x 30 x 2 = Rs. 0 - (B)
Total - 75 + 0 = Rs. 75
The higher amount is Rs. 105 (daily basis).
If the worker in the example above works an additional 2.5 hours for three days in the same week, the calculation will be as follows:
1) Daily basis: Scheduled time - 7.5 hours
OT time @ normal rate - 9 - 7.5 = 1.5 hours
OT payment - 1.5 x 3 x 30 = Rs. 135 - (A)
OT time @ double rate - 10 - 9 = 1 hour
OT payment - 1 x 3 x 30 x 2 = Rs. 180 - (B)
Total - 135 + 180 = Rs. 315
2) Weekly basis: Scheduled time - 7.5 x 6 = 45 hours
OT time @ normal rate - 48 - 45 = 3 hours
OT payment - 3 x 30 = Rs. 90 - (A)
OT time @ double rate - 52.5 - 48 = 4.5 hours
OT payment - 4.5 x 30 x 2 = Rs. 270 - (B)
Total - 90 + 270 = Rs. 360
The higher amount is Rs. 360 (weekly basis).
Abbas.P.S