Understanding Overtime Pay in Shoe Manufacturing: How Are Extra Hours Calculated?

Criteria for Calculating Overtime in a Shoe Manufacturing Unit

In a shoe manufacturing unit, the criteria for giving or calculating overtime typically depend on various factors such as labor laws, company policies, and collective bargaining agreements. Overtime is usually granted when employees work more than the standard hours per week or per day as defined by relevant regulations or employment contracts.

The calculation of overtime pay often involves multiplying the regular hourly wage by a predetermined factor, commonly 1.5 times the regular rate, for hours worked beyond the standard threshold. It is essential for employers to adhere to legal requirements and ensure fair compensation for employees who exceed normal working hours.

I presume that the shoe manufacturing unit is a factory as defined in the Factories Act. Then the provisions relating to overtime contained in the Factories Act will apply.

Thank you, Mr. Harikrishnan, Yes, it is covered under the Factories Act. Please clarify:

Suppose Mr. A has a monthly salary of 9000. So, do we calculate his wages per hour as (9000/30 days = 300/day)? Again, 300/8 hours = Rs 37.50. This Rs 37.50 will be the one-hour overtime of Mr. A, or do we give him something in excess of this calculated amount.

Regards,
Nasir

Subject: Re: Overtime

I would like to inquire about the definition of wages or salary to be used when calculating overtime. Specifically, should it be based on gross emoluments such as basic pay, DA, HRA, special allowance, etc.? It is clear that overtime payment is typically double the wages.

Thank you,

D.K. Parashar

In your calculation, you take 30 days per month. However, based on my knowledge, it should be 26 days per month. "Weekly off" will not be included in this calculation, and the overtime rate will be twice the general hourly rate. Therefore, if I am not mistaken, the actual calculation will be: OT will be: 9000/(26*8) = 43.00 x 2 = Rs. 86/hr.

Overtime calculation depends upon company policy. Some organizations give it based on the basic salary, while others provide it as part of the gross salary (basic + HRA + Conveyance, etc).

Thank you.

Overtime is a legal right and cannot be based on the company's policy. It depends on the section/clause relating to the rate of overtime wages contained in the law applicable to the establishment concerned. When you make a posting on the website, please ensure that what you say is correct.

With regards,