Understanding Overtime Pay: Which Salary Components Count Under the Factories Act 1948?

Dear Friends,

We are paying the salary in different heads like Basic & DA, HRA, Transport Allowance, Medical Allowance, Children Education Allowance & other allowances. My query is, in the above-mentioned salary heads, which components should be taken into account for overtime calculation as per the Factories Act 1948.

Regards,
Sujith

Hi,

All the components which belong to daily components must go to OT with some extra rate, say 150% or 200%.

Dear seniors,

Can anybody send me the details of Components for Overtime Calculation as per the Factories Act?

For example, components like:

BASIC+DA + HRA + CA + SP = Total
Rs.2725 + Rs.200 + Rs.200 + Rs.400 = Rs.3525

How do we calculate per hour?

Please guide me without delay.

Thanks & Regards,
Avinash Kumar.K

Is there any clause in the ESI Act regarding overtime and overtime wages?

Regarding OT pay on Gross as in the Factory Act, the definition of wage for overtime is Basic plus such allowances. Therefore, OT is calculated on the gross amount, and we pay double the rate.

Thanks,
Amar Singh

The Factories Act states that overtime (OT) should be twice the ordinary wage. If the gross is 3525, the per day wage is 135.57 (3525/26), and the per hour wage is 16.94 (3525/26/8). The calculation for overtime pay is Gross/26/8*2*number of OT hours or Gross/104*2*number of OT hours.

Therefore, for 1 hour of overtime, the calculation is 3525/26/8*2*1 = 33.89.

PS: Please verify if the salary is calculated based on 26 working days. The minimum wages gazette stipulates that to determine the daily wage, the salary should be divided by 26.

Thank you.

Hi, all allowances and OT have to be covered and deducted with ESI.

Thank you.

For OT calculation, only basic and ESI will be considered.