Is It Legal to Offer Compensatory Offs Instead of Overtime Pay in ITES Companies?

Compensatory Offs and Overtime

Hi,

I am the HR Manager of an ITES Company in NCR. I need your urgent assistance and guidance regarding the legal terms of Compensatory Off and Overtime.

One of my divisions has very high volumes during the month end. Every month on the 30th, they receive many files to process which have to be completed in 2 days. This amounts to about 300% more than the normal volume.

What we have done here is that we arrange for them to stay near the office so that they can go and take rest once they work for 8 hours. Again, they come back and start working. This saves the commuting time from their homes to the office.

The total working hours are around 30 hours for this group during these 2 days. However, they take their breaks and also go to sleep as and when they want.

We give them Compensatory Offs for the extra time that they are working. For any extra hours over 8 hours, they get an equivalent number of Compensatory Offs. Usually, they get around 3 days as Compensatory Offs for this extra time that they spend in the office.

Now, we do not give them any Overtime Wages. We give them Compensatory Off instead of the Overtime Wages.

Our Company is registered under the Shops and Establishments Act and also under the STPI (Software Technology Parks of India).

Is this legal what we are doing? Can Compensatory Offs be given legally instead of Overtime Wages? If yes, please guide me towards any documentation or legal terms that I may be able to share with my management team.

Regards,
Raman

Dear Raman,

As per your query, if the workmen are working on holiday, the Compensatory offs shall be given to the workmen. But in your case, it seems instead of holiday, they are working beyond prescribed working hours. In this situation, as per my opinion and understanding, overtime pay is payable to the employee at double the rate of normal wages. According to the Act, overtime is also restricted to 50 hours per quarter.

However, this is applicable to workmen only. If your employees are working in a managerial or administrative capacity, then it will depend on your company policy.

You can continue with this policy as long as you give your employees a 21-day notice. It is not non-compliance if you are providing compensatory time off. However, this policy is applicable to your employees and not to workmen.

Please let me know if you need any further assistance.

No, this is non-compliance. Compensatory time off and overtime are two distinct issues. Compensatory time off is given only when an employee works on a holiday, while your employees are working beyond their regular hours. In this scenario, overtime pay is required.