How Do You Calculate Overtime Pay for 49 Extra Hours? Let's Figure It Out Together

How to Calculate Overtime

The information given by the interviewer is mentioned below:

If X employee is getting:
- Basic: 10,000
- HRA: 6,000
- Conveyance: 800
- Medical: 1,250

And the earned gross salary is 20,000. If X has done 49 hours of overtime, what is the payment done by the employer to the employee for 49 hours of overtime?

Usually, overtime (OT) is calculated based on the basic hourly wages. For example, if the basic wage is Rs. 10,000/-, the per day wage would be Rs. 10,000/25 = Rs. 400/-. Calculating the wage per hour would be Rs. 400/8 = Rs. 50.

Overtime pay is typically double the regular wage, so the OT wage per hour would be Rs. 100. For working 49 hours of overtime, the total OT pay would amount to Rs. 4,900/-.

Please let me know if you need further clarification on how overtime wages are calculated.

The overtime is to be calculated separately on the basis: Total Monthly Salary/number of days in a month/8 hours (or the daily work hours) * 2 * number of OT hours worked. So it will be 20,000/31/8*2*49 = 7,903/-. The same amount is to be added separately in your payroll statement.

NOTE: Some companies calculate OT on Basic+DA, and some calculate on Total Gross Salary. Seniors, kindly correct me if I have gone wrong anywhere.

Regards.

As mentioned above, there are some companies that calculate OT on Basic+DA and some companies that calculate OT on total monthly gross salary. The formula mentioned below is as follows:

1) Basic+DA divided by the number of days in the month divided by 8 hours (daily work hours) multiplied by 2 multiplied by the number of hours worked.

2) Total Monthly Gross divided by the number of days in a month divided by 8 hours (or daily work hours) multiplied by 2 multiplied by the number of hours worked.

In both cases, the formula remains the same. The logic is that normally, if you get paid Rs. 10 per hour, then working for 1 hour OT - you'll be paid Rs. 20 (twice the rate). We require confirmation on:

a) Whether it is Basic+DA or Monthly Gross.
b) Whether the days of a month should be excluding Sundays.

Seniors, we require your kind guidance on the same. Besides Sujayda, I hope your confusion is cleared to a certain extent at least.

Regards

Take the Basic HRA and Conveyance and total it. (You should not include Medical allowance for OT). Now, add the three, divide it by 30 days, and you get it for one day's salary, i.e., for 8 hours. This figure should be divided by 8 to get the hourly salary, and this figure should be multiplied by 49 hours, which is the OT for 49 hours.

GOT IT?

Regards,
Venkat
Bangalore

Overtime Payments Under Departmental Rules (DOT)

In the case of Day Workers, overtime is paid at the rate of Basic Pay + Dearness Allowances + City Compensatory Allowance + Personal Pay + Special Pay + Pension, to the extent applicable, divided by 200 for each hour of overtime worked. The hourly rate is the same for work done in both Day and Night Shifts.

In the case of Piece Workers, there are two sets of rules for DOT. It is calculated at 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 at (Basic Pay + Dearness Allowances + City Compensatory Allowance)/200.

Overtime Payments Under the Factories Act, 1948

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

Day Worker: The hourly rate of payment, applicable equally in the day shift and the night shift, is calculated at the rate of twice the pay & allowances/200.

Piece Worker: The hourly rate of payment in the day shift is calculated at the rate of twice the pay & allowances/200. In the night shift, it becomes (twice the pay + pay/4 + allowances)/200.

Regards,
Tanaya Hoigekar
Sr. Manager HR & Admin

Please note that OT wages mean: Basic wages plus such allowances, including the cash equivalent of the 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. Days calculation: 26 or 27 or 25 (Excluding Sundays).

Regards,
Abubakkar

Please refer to the Factory Act of 1948 (Sec. 59) wherein it is mentioned that all allowances are to be considered for the calculation of overtime, and it should be paid at a double rate. However, in the Shops and Establishment Act, the definition of overtime is not given.

Regards,
Anand

You can calculate OT like this.

Case 1:
If you work for 5 days in a week and 8 hours for one day, suppose the Basic is INR 6000. The logic is 21 working days for a month, and if you work for 8 hours for one day, then (Basic)/21*8 = Basic/168. This is for one hour. You can calculate like this: 6000/168 = 35.71 Rupees for one hour.

Case 2:
If you work for 6 days in a week and 8 hours for one day, 6000/26*8 = 6000/208 = 28.84 Rupees for one hour.

Thanks and regards,
Anil

Overtime is payable only on Basic + DA & VDA. If DA & VDA are not part of the salary, forget about them. All other allowances are not applicable.

The calculation is straightforward: basic / 208 (one-hour wage) x 2 (payable double hour) x actual OT hours, i.e., 49 hours. Hope you can remember this 208; it is a shortcut, instead of doing basic / 26 days / 8 hours.

Regards,
S Rao / [Phone Number Removed For Privacy Reasons] / Hyderabad

Overtime Calculation Confirmation

This is Ganesh from Hyderabad. Yes, Sh. Jeevarathnam has given the correct answer. The overtime (OT) will be calculated on an hourly basis and will be double the payment, which is statutory.

Regards,
Ganesh