Overtime Policy Dilemma: Should We Adopt Thai Practices in India and What Are the Risks?

Overtime Policy Query

I have a query about overtime: Is it compulsory to give overtime to employees? I am currently working at a Thai-based manufacturing company, and I am in the process of preparing an Overtime Policy for the company in line with Thailand's regulations.

In our company, staff and above employees receive overtime wages at 1.5 times their basic pay, while laborers are paid double their basic rate for overtime work. However, I have not come across the provision of 1.5 times wage for staff and above grades in Indian labor laws. If I were to implement the same practice in India, what potential issues could arise in the future, and is it advisable to do so in India?

I would greatly appreciate input from senior colleagues on designing an overtime policy.

Best regards,

NAG
[Phone Number Removed For Privacy Reasons]

According to the Factory Act, overtime is paid at double the normal hourly rate. If you follow this, you will not encounter problems in the future.

With Warm Regards,
Bhavesh Kalal

Overtime Wages as per Indian Factories Act

As per the Indian Factories Act, all 'workers', whether staff or others, are to be paid double wages for their work exceeding 9 hours a day or 48 hours a week.

Regards,
Varghese Mathew

Overtime Payment Considerations

No law has restricted the payment of overtime wages to staff, although many labor laws have encouraged payment for overtime work by making it mandatory on the part of management. However, it is always desirable to make it applicable to those categories of employees, whether shop floor workers or staff, whose work can be quantified at the end of the day. Otherwise, what will happen is that staff who are generally not guided by a fixed time limit or who do not have any measurable or quantifiable tasks will stay back even without any work and claim overtime.

The very purpose of overtime wage payment is to restrict the employment of workmen after a prescribed number of hours of work, say 9 hours or 8 hours; however, the same should not be used as a means to earn money. In my opinion, staff members do get enough breaks within their official hours, they have more flexibility in operation, they get time for relaxation, and their overstaying for tea or lunch is not objected to. At the same time, workers will not get any such privileges but are constantly watched by their supervisors. There can be exceptions, but they should be deemed to be due to the wrong policies of the management.

Therefore, for staff categories of employees, it is not advisable to give overtime payments. Certainly, if they have to stay back for completing an audit or stocktaking, naturally, some amount calculated based on the additional hours spent shall be given to them.

Regards,
Madhu.T.K