Can anyone suggest to me how we can calculate the overtime wages? What's the formula?

Hi,

Can anyone suggest to me how we can calculate the overtime wages? What's the formula?

Regards

dear member

Industrial employees are entitled to additional payment for work done

beyond the normal working hours. There are two sets of rules applicable for overtime payment viz. (i) Departmental Rules and (ii) The Factories Act.

For work beyond normal working hours and upto 9 hrs. a day or beyond 44.75 hrs upto 48 hrs in a week, overtime is paid under departmental rules which is known as DOT.

For work done beyond 9 hrs. a day or 48 hrs a week, payment is admissible at twice the rate of pay plus all allowances under the Factories Act (often loosely termed as OT Bonus).

OVER TIME PAYMENTS UNDER DEPARTMENTAL RULES (DOT)

In the case of Day Workers, the overtime is paid at the rate of Basic Pay + Dearness Allowances + City Compensatory Allowance + Personal Pay + Special Pay +Pension to the extent as applicable, divided by 200 for each hour of overtime worked.

The hourly rate is the same for the work done both in Day & Night Shift.

In the case of Piece Workers, again there are two sets of rules for DOT.

It is calculated @ Basic Pay (alone)/200 per hour in the day shift. For working in the night shift, an additional element known as Night Shift Bonus is also added.

This is calculated

for half an hour for each hour of overtime worked under departmental rules @ (Basic Pay + Dearness Allowances + City Compensatory Allowance)/200.

OVER TIME PAYMENTS UNDER THE FACTORIES ACT, 1948

For work done, beyond 9 hrs. a day or 48 hrs a week, there are two sets of rules –one for the Day Worker and the other for the Piece Worker.

Day Worker: Hourly rate of payment which are applicable equally in the day shift as well in the night shift is calculated at the rate = twice the pay & allowances/200.

Piece Worker: Hourly rate of payment in the day shift is calculated at the rate = twice the pay & allowances/200. In the night shift, the same becomes = (twice the pay + pay/4 +

allowances)/200.

Hope it will be helpful.

regard

basant

Hi, Amrita,

It is to be calculated at double the rate of the ordinary rate of wages drawn by him. For details, please read section 59 of the Factories Act. The complete procedure is provided. If it is still not clear, please ask again.

Regards,
Anil Kaushik

Hi,

Overtime will be calculated as follows: Gross wages / 26 / 8 X 2 X number of extra hours worked.

Regards,
Ganesh

Dear Basant,

I didn't understand your method of dividing the rate by 200. I believe that under the Factories Act, overtime (OT) is calculated at double the hourly average rate of wages. The hourly rate is determined by dividing the daily wages by 8, and the daily rate is calculated by dividing the monthly wages (Basic + DA only) by 30 or 26, depending on the case. As Ganeshhr pointed out, it may not necessarily be 26 days since the Factories Act does not specify it, unlike the Gratuity Act, where the daily rate is calculated by dividing the monthly salary by 26, regardless of whether the employee is monthly rated or daily rated. However, under other labor enactments, the daily rate of wages refers to monthly wages divided by 30 for monthly rated workers and by 26 for daily rated workers.

Regards,
Madhu.T.K

Hi Madhu,

For calculating overtime compensation, the denominator factor should always be 26 to arrive at the daily rate of wage of the worker. According to the notification issued by the concerned state government's labor department regarding minimum wages for scheduled employment, it states that to determine the daily rate of wages, monthly wages should be divided by 26. Therefore, for OT calculation to establish the daily rate of wages (or) ordinary rate of wages, the gross wages should be divided by 26.

Regards,
Ganesh

Dear One,

Thanks for the valuable information. Could you please provide me with the OT calculations for a company that operates on a five-day workweek? Additionally, I would appreciate it if you could share the template for requesting OT work.

Pradeep D.

Dear,

It is always to be divided by 26, not by 30 as mentioned by someone earlier. Why are we dividing by 30/26? Because to get one day's salary, and one day salary you will get by dividing 26 as per the Minimum Wages Act.

J S Malik

Dear Gupta,

Under Section 59 of the Factories Act, if a worker works in a factory for more than 9 hours in any day or more than 48 hours in any week, he shall be entitled to wages at twice his ordinary rate of wages for overtime work.

However, please note that the Factories Act does not provide a specific definition for wages. Therefore, how do we determine or understand the ordinary rate of wages?

The term 'ordinary rate of wages' refers to the basic wages plus any allowances, including the cash equivalent of benefits resulting from the discounted sale of food grains and other items that the worker is currently entitled to. This calculation excludes bonuses and wages earned from overtime work.

S. Rajasekaran
Email: srs_vignesh@yahoo.co.in

Dear Malik,

You mentioned that to calculate daily wages, we should divide the monthly salary by 26 instead of 30 or 31. Could you please specify the section in the Minimum Wages Act that pertains to calculating a day's salary?

Regards,
Anoop Sathyan

Dear Friend,

For OT calculation, it would be as follows: Basic + DA/26/8x2 x number of hours worked. For the monthly salary, it is calculated based on the total days in a month. For example, in March, there are 31 days. If we calculate 2 days' salary for an individual, the calculation would be: Total Gross Salary / 31 x 2 days.

Furthermore, when considering overtime (OT), it will be calculated on a 26-day basis as per the Factory Act under Section 59.

Dear All,

Calculating overtime is very simple. It is twice the sum of Basic + DA to calculate the hourly rate. When we calculate the salary based on the number of days in a month for monthly-paid employees, we must consider the days as per the calendar month for per day OT rate calculation. Divide by 8 hours to get the per hour rate.

Per hour OT rate = (((Basic + DA) * 2) / 30) / 8

OT Hours * Per hour OT rate = OT amount

Thank you for your reply.

I have checked Section 59 in the Factories Act, but it is not clearly mentioned that for overtime (OT) calculation, the monthly salary should be divided by 26 days.

According to the Factories Act 1948, 'Ordinary Rate of Wages' means "the basic wages plus such allowances, including the cash equivalent of the advantage accruing through the concessional sale to workers of food grains and other articles, as the worker is for the time being entitled to, but does not include a bonus and wages for overtime work."

What all falls under the term 'such allowance,' and how can we determine that OT wages are only Basic + DA?

I am eagerly awaiting your reply.

Anoop

Dear All,

Calculate overtime as follows in a simple way: (Monthly salary X Hrs worked(OT) / 240) X 1.5 or 2 (as applicable - 1.5 times or double).

240 hours for a 30-day month and 248 hours for a 31-day month.

Regards, MS

Hi Sir,

Please suggest overtime calculation for gross salary. The per day rate is $427, working days are 26, and the earned amount is $15,600.

Thank you.

Dear All,

1. Overtime is always double, irrespective of the number of extra hours put in.
2. The amount per overtime hour is calculated as follows: {Gross / (number of working days in a month) / 8} * 2. For example, if the gross salary of a person is 3300/-, then in the month of January, the per hour overtime rate would be (3300 / 25 / 8) * 2 = Rs. 33.00. In the month of February, it would be (3300 / 24 / 8) * 2 = Rs. 34.38, and so on.

For more clarity, please refer to the Payment of Wages Act along with the Factory Act.