As per 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. In excess, 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 in excess double. If there is any difference between the calculations on a daily and weekly basis, whichever is beneficial to the employee has to be paid.
For example: A company works 6 days in a week with a uniform working time of seven and a half hours per day (8 hours including a 30-minute break). Let a worker work for 2.5 hours extra, i.e., a total of 10 hours in a day, whose per-hour remuneration is Rs.30. Then 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 = 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 = NA
OT payment - 0 x 30 x 2 = Rs. 0 - (B)
Total - 75 + 0 = 75/-
Whichever is higher is Rs. 105 (daily basis)
If the above worker works an additional 2.5 hours each for three days in the same week, then 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 = 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 = 360/-
Whichever is higher is Rs. 360 (weekly basis)
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