Understanding Overtime Pay and Deductions Under the Factory Act of 1948: Can You Help?

Hi Everybody,

Can anyone explain to me how we calculate the payment for overtime as per the Factory Act of 1948 and what deductions need to be made on the overtime? Please explain to me.

Regards,
Paul

Dear Mr. Paul,

Vide Section 59 of the Factories Act, 1948, it contemplates that if a worker works in a factory for more than 9 hours in any day or for more than forty-eight hours in any week, he shall be entitled to wages at twice his ordinary rate of wages in respect of overtime work.

Here, wages mean the basic wages plus any allowances, including the cash equivalent. However, most companies only pay twice the basic wage.

For instance, if a worker works 5 hours of overtime and his basic wage is Rs.1000 per month, the calculation would be as follows:
Basic per month / 30 (to arrive at the daily basic) / 8 (to arrive at the hourly basic) * 5 (number of hours of overtime).

I hope this is clear.

Regards,
Michael Nicholas