Overtime Pay Confusion: Should It Be Based on Basic or Gross Salary?

I am working in an MNC. I just want to know if any worker works more than 8 hours in a day, do we have to give them overtime? So, my question is, should overtime be calculated based on the basic salary or the gross salary?

Welcome to CiteHR. Regarding your query, first, determine under which Act/Rules you are required to pay overtime, and then review the provisions relating to the payment of OT in that Act/Rules.

[R.N.KHOLA]

Overtime Calculation Formula in Manufacturing

We are a manufacturing company, and we use the following formula for overtime (OT) calculation:

OT Formula = Basic / number of working days in a month / number of working hours in a day * 2 * number of OT hours

Thank you.

Regards, Sarojini

I think this is the right formula to calculate OT as suggested by Sarojini. Sarojini is a part of our manufacturing company, and we use the following formula for OT calculation:

OT Formula

OT Formula = Basic / no. of working days in a month / no. of working hours in a day * 2 * no. of OT hours

Please review and let me know if you need any further clarification or information.

Thank you.

For your clarification:

Steps to Calculate Overtime Pay

1st Step: O.T = Basic / number of working days in a month. You will get the Basic pay for one day. Now, to find out the Basic Pay for an Hour (in our concern, I use calculation for minutes), the next step is:

2nd Step: The result of the 1st step / number of working hours per day.

3rd Step: The result of the 2nd Step × number of O.T hours worked.

For example: Basic = 3500.00, Number of Days: 25, Number of working hours: 8, O.T hours = 2. Then,

3500 / 25 / 8 × 2.

Regards

Overtime is always calculated on an hourly basis and is based on the basic pay and VDA (if applicable). The gross amount contains many components such as HRA, incentives, etc.

Regards,
Sita Ram Pandey

It is to be paid at the ordinary rate of wages, which includes basic, DA, HRA, etc. Please refer to the Factories Act and related rules.