Understanding Overtime Pay: How Do You Calculate It Under the Factories Act 1948?

Hi,

Can anyone explain how we calculate the payment of overtime as per the Factories Act 1948 and what deductions need to be made on overtime?

Kindly provide me with the details, please.

Regards,
Paulraj

Overtime is required to be paid under Section 59 of the Factories Act, and it is calculated at double the ordinary rate of wages. Wages mean basic wages and allowances to which a worker is entitled, including the cash equivalent of the advantage accruing through the concessional sale to workers of food grains and other articles but not bonus.

P. M. Aptel

Consider a major aspect of overtime. If any employee works on 26th Jan, 15th Aug, or on such public holidays, the employer has to pay 3 times the normal wages. Many people do not know about this, but we need to be vigilant about such matters.

Regards,
Prashant Patil

Hi, Paulraj,

Regarding the overtime paid in our company, you may refer to this.

Overtime Work

I. General Policy

Generally speaking, the company does not encourage employees to perform overtime work under normal conditions. However, unforeseen events may occur that disrupt our business operations, such as material shortages, machine shutdowns, or engineering changes. In order to meet operational schedules or maintenance requirements, the company may request an employee to work beyond the normal daily work period with overtime payment.

II. Overtime Payment

Non-exempt employees are eligible to request overtime payment. The hourly rate for overtime payment is determined in accordance with the provisions of the Labor Standards Law. Exempt employees are only eligible to request compensatory leave after they have worked overtime.

Non-exempt employees who are required to work beyond the regular daily hours should be granted overtime pay at the hourly rate of pay plus one-third for the first two hours of overtime work, or at the hourly rate of pay plus two-thirds for the subsequent two hours, or at the hourly rate of pay plus double for any hours worked after the initial four hours.

III. Procedure

Overtime work must be approved by the department manager or supervisor in advance through the submission of a "Request For Overtime" form. The HR department is responsible for verifying the overtime records on the time cards/time records in the computer, calculating the overtime payments earned by employees, and processing the amounts for inclusion in the monthly payroll at the end of each month.

John Chiang