Overtime Pay Confusion: Which Wage Components Should Be Included for OT Calculation?

Dear All,
There is some confusion regarding the overtime payment. As per the law, it should be double payment of wages, and wages include many components. My question is, which component should be taken for OT calculation? Can we take all components or only Basic & DA? Our wage components are basic, DA, HRA, and Conveyance. What does the law say?

Regards,
Arun Gupta

As per law, wages mean basic wage and dearness allowance. Therefore, you can calculate overtime (OT) based on the basic wage and DA only. However, workers may argue that their basic wages are intentionally set at a lower level to reduce various burdens such as bonuses, EPF contributions by the employer, etc. Their salary may have been divided into smaller components to benefit the employer rather than the employee.

If we accept their perspective, the total salary for which they are entitled, had they worked for a day, should be considered as the base for calculating overtime wages. This same wage will be deducted if they are absent from work or take unpaid leave.

Regards,
Madhu.T.K

Hello, I have a doubt after calculating OT. To calculate PT, as per law, do we need to add OT to the gross salary to calculate PT? Below is the calculation I am doing; please advise.

Salary Breakdown

- Salary: Rs 8,980
- Basic: 3,592
- HRA: 1,437
- Conv: 800
- Med: 1,200
- Other Allow: 1,901
- OT: 1,356

- Gross Salary: 10,336
- PT: 150
- PF: 431

In this case, the employee's salary is Rs 8,980. If I add OT within the Gross salary, then the gross salary will increase to more than Rs 10,000, and the employee needs to pay P.T. So please help me, should OT be added within Gross Salary or outside Gross Salary.

Thanks,
Sree

Madhu, thank you for your reply. I am working in a factory. Here, everyone is saying that OT should not be considered to calculate PT. Now, I am just trying to find any written document on that. Please let me know if you have any.

Thanks,
Sree