Is It Fair to Change Overtime Rules? Seeking Advice on Employee Reactions and Policy Loopholes

Hi,

I am new to this forum. Just have a query about overtime - is it compulsory to give overtime to employees. Our company is an architectural firm with about 40 employees. We had an overtime policy where one has to complete 8 hrs per day, and the extra hours worked were counted as overtime without the prior permission of the seniors.

Now, we have changed this policy. An employee has to take prior permission to work overtime, and also overtime will be counted for a complete 1 hr. For example, office ends at 6.30 pm, and if an employee works till 7 pm, no overtime will be there. Only if he works till 7.30 pm, overtime will be counted.

Now, the employees are not happy with this. They want overtime for ten to fifteen minutes also. Can anyone tell me if there are any loopholes in this policy and how we can change the attitude of employees towards overtime.

Regards,
Anju

Taking prior permission for overtime is justified. Explain to your employees that many people were taking advantage of the old policy. At times, there was no work, and still, people were in the office doing nothing but surfing the internet on websites of their own choice and entertaining themselves. Of course, they enjoy the canteen facility, AC, phone facility, and a lot more.

Inform those employees that some people were caught, and their phone call details, internet bills, and other expenses were checked and analyzed. The management discovered that some individuals were taking advantage of the liberty given to them. The new policy was implemented because of them. Also, reassure them that this won't affect those who genuinely work, as the management values their timely contributions due to deadlines.

Additionally, note that nobody is paid for overtime of 15-20 minutes. While in some places these minutes may be accumulated and converted into an hour, it is not appropriate. Some employees, before leaving work, make personal calls, pack their bags, or wait for others to finish, and they should not be compensated for these activities. However, if a person stays until 7:30, it indicates they worked for some time. You need to articulate your statements persuasively and firmly. Emphasize the importance of adapting to the new system despite initial resistance, as people will eventually get used to it. Encourage them with the positive aspects and benefits.

Take care.

Anand.

Hi,

We have also faced this problem in our concern, but we have eliminated issues arising from overtime. You can take the following steps:

1. Issue a written notice stating that no employee will be paid for overtime without prior permission.
2. When overtime is necessary, a particular employee should be asked to work overtime by their immediate supervisor or boss.
3. Implement an overtime sheet for each employee.
4. The next day's overtime sheet must be signed and approved by the immediate supervisor or boss.

By following the above steps, you can minimize the overtime hours in your firm. I believe that 10 to 15 minutes should not be considered as overtime hours.

Regards,
Rajesh

Dear Anju,

I am sorry that I have to reply to your query without having referred to the replies by other friends due to the paucity of time.

Firstly, determine under which statute your company/organization is covered or falls within the purview. For example, the Factories Act or the Shops & Establishments Act, etc. Next, carefully notice if there are any exemptions for a particular industry, process carried out, etc. within the Acts/Statutes under which your organization/company falls. Also, check whether the workmen fall within the definition of worker/workmen under that particular applicable Act. (For example, as per the Industrial Disputes Act, all are workmen, but all other acts define workmen differently, and technically this has to be noted.)

As per the Factories Act (not referring to the exceptions), no worker shall be allowed to work more than 8 hours per day and 48 hours per week (working days) without being paid overtime (at twice the rate of normal wages) for the extra hours of work. The total number of hours, including overtime, is again limited by statute. Also, examine certain nuances. For example, a workman may work for more than 8 hours per day and need not be paid overtime for hours beyond 8 on a particular day if he is not working more than 48 hours per week. How's that possible? Say a worker has actually worked more than 8 hours per day for only 3 days and was absent on the rest of the days of the week. In this case, though he has worked more than 8 hours per day for three days, yet the other condition of exceeding 48 per week is not met. Hence, these extra hours pay will be normal pay, and there is no legal requirement to pay overtime for those extra hours per day beyond 8 hours. If implementable, it can save a company lots of money in the long run. Much depends on the tradition that has been followed, and it is near impossible to reverse it if overtime beyond 8 hours per day for workmen has already been a precedence or practice. In actuality, a lot of organizations are still not paying overtime even though it is not legally right.

Any comments and views on that?

Regards,

M.A. Ganju

We also work for just 44 hours in a week and not 48 hours. Then, we have this overtime policy.

So now, with your inputs, I will try to improve things.

Thank you so much.

Dear Anju,

Kindly note that what is given in the applicable statutes is mandatory minimum to be followed and complied with. However, any organization may have its own policies and practices (consistently applied) that, in totality, are not less advantageous to the employees or workmen than the provisions stated under any particular applicable statute. So, if your company has followed the practice of awarding overtime beyond the 44 hours of work put in one week (6 working days) and since it is more advantageous than the minimum prescribed by the statute (say, Factories Act), the company policy/practice will prevail even if there were no legal obligation to do so.

Moreover, what happens or follows in actual practice is that once a precedent is set and followed for some time, it is almost very difficult to reverse the same even in the eyes of the law. The law has no issues with your company practices if, in totality (holistically and not in fragments or parts), they are superior to any statute in their benefit to any statute.

I hope I have clarified your statement.

Many regards,

M.A. Ganju

Would the OT law be different depending on the type of organization, i.e.,
Proprietary Firm, Partnership Firm, Public Ltd, Pvt Ltd? Or does the OT Law or any employee law depend on whether it comes under the Factory Act or Shops & Establishment Act?

Regards,
Asha

Dear Anju,

A proper format should be designed where the employee mentions the purpose of doing overtime, their name, employee ID, start and end times, etc.

Priyanka

Dear Anju,

I am sorry that I have to reply to your query without having referred to the replies by other friends due to the paucity of time. Firstly, determine under which Statute your company/organization is covered or falls in purview. For example, the Factories Act or Shops & Establishments Act, etc. Also, carefully notice if there are any exemptions for a particular industry, process carried out, etc within the Acts/Statutes under which your organization/company falls. Check whether the workmen fall within the definition of worker/workmen under that particular applicable Act (As per the Industrial Disputes Act, all are workmen, but all other acts define workmen differently and technically this has to be noted).

According to the Factories Act (not referring to the exceptions), no worker shall be allowed to work more than 8 hours per day and 48 hours per week (working days) without being paid overtime (at twice the rate of normal wages) for the extra hours of work. The total number of hours including overtime is again limited by statute. Also, examine certain nuances. For example, a workman may work for more than 8 hours per day and need not be paid overtime for hours beyond 8 on a particular day if he is not working more than 48 hours per week. How's that possible? Say a worker has actually worked more than 8 hours per day for only 3 days and he was absent on the rest of the days of the week. In this case, though he has worked more than 8 hours per day for three days, yet the other condition of exceeding 48 per week is not met. Hence, these extra hours pay will be normal pay, and there is no legal requirement to pay overtime for those extra hours per day beyond 8 hours. If implementable, it can save a company lots of money in the long run. Much depends on the tradition that has been followed, and it is near impossible to reverse it if overtime beyond 8 hours per day for workmen has already been a precedence or practice. In actuality, a lot of organizations are still not paying overtime even though it is not legally right.

Any comments and views on that?

Regards, M.A. Ganju

Thank you, Mr. Ganju, your reply is very good except for the following error. Please note that as per the Factories Act, the overtime provision states if a workman works more than 9 hours a day and 48 hours a week may be corrected.

Regards, Sawant

OVERTIME

I. GENERAL

As a general policy, overtime work is to be avoided. Not only is it costly in terms of added salary expense, but it may seriously affect employee morale. Experience has shown excessive overtime to be a substantial cause of resignations. Therefore, it is a major responsibility of supervisors throughout the Company to eliminate overtime to the extent possible or when it becomes necessary in the interests of our business, to hold it to a minimum.

The supervisor who discusses overtime policy and procedures with the new employee before an overtime situation arises will have solved in advance most problems overtime work can entail. Care should be taken, however, to include no promise of overtime work as a means of providing added compensation on a regular basis, even though some employees may volunteer to handle any and all overtime work that may arise.

The Company operates on a normal workweek of five days, 40 hours (an eight-hour normal workday). Company is paid for overtime work on the following basis:

1. Overtime is paid to non-exempt employees at time and one-half the weekly rate divided by 40 for work beyond their regular workday.
2. The Company does not, however, begin accruing overtime until an employee has worked one-half hour beyond the regular workday.
3. Once non-exempt employees have worked one-half hour beyond the regular workday, they receive pay at time and one-half computed on actual minutes, for all time over and above the regular workday.
4. In all such computations, meal periods are excluded.
5. Overtime work is authorized by the supervising officer's signature in the designated box located in the lower right-hand corner of The Payroll Time Batch Control Form.
6. Payment for overtime is computed on the same basis, whether the hours worked are in the department to which the employee is regularly assigned or in another department.

The foregoing provisions apply to part-time employees in the same manner as full-time non-exempt employees; for example, such employees receive pay at 1 1/2 times their regular hourly rate for work beyond 8 hours per day. This is not, however, accrued until an employee has worked 8 1/2 hours in one day.

Supervisors and exempt employees do not receive payment for overtime on days included in their regular workweek.

II. COMPENSATORY TIME

At the discretion of their supervisors, some employees who work on a 5-day workweek and work at least 5 hours on a non-regular workday may be granted the option of a day off with pay in lieu of overtime pay. The day must be taken during the pay period in which overtime occurs. Full-time employees on a 4-day workweek must work 6 3/4 hours on a non-regular workday to be eligible for compensatory time. This option also applies to holiday work; that is, eligible employees may receive regular compensation for the holiday and an additional day off in the same pay period in lieu of overtime pay.

III. SHIFT DIFFERENTIAL

Employees who are assigned to the evening or night shifts, other than on a temporary assignment of less than one month, receive a differential payment of 15% of their base salary. An employee subsequently transferred to the day shift loses the differential.

Employees starting work between 2:00 p.m. and 10:00 p.m. are employees of the evening shift. Those starting after 10:00 p.m. but before 4:00 a.m. are night shift employees.

The shift differential for part-time evening employees is not included in base pay but is granted when the major portion of working hours falls after 6:00 p.m.

IV. SUPPER ALLOWANCE

A supper allowance of $ is paid to exempt employees who work two hours or more beyond their normal workday during their regular workweek. However, a supper allowance is not paid for those employees who are scheduled working at evening as normal working hours.

Non-exempt employees receive overtime pay and are not eligible for supper allowances.

The supper allowance is reported on the Time Data Entry System or on the Time Record Card (returned to the Payroll Unit by Wednesday of each week). Supper allowances to eligible employees for work performed in departments other than their own are also reported on the Time Data Entry System or Time Record Card in the loan-out category.

V. LEGAL HOLIDAYS AND NON-REGULAR WORKDAYS

In addition to regular pay for holidays, non-exempt employees are compensated at time and one-half, with a minimum of three hours' pay, when they work on a legal holiday regularly observed by the Company, or on any day which is not part of their regular workweek. Employees who are exempt from overtime receive straight time with a minimum of three hours' pay for work on the above-mentioned days. Supervisors below the rank of Manager receive $ per hour with a minimum of $. Approval of the supervising officer must be obtained in the case of exempt employees, and the area supervisor in the case of officers. Neither group is entitled to supper money.

Officers at the level of Manager and above are ineligible for compensation other than reimbursement for travel expenses and supper money.

John Chiang, Shanghai, China

Dear John Chiang,

We are glad to know your Chinese identity and see your comments on this forum. Interestingly, every one of us was under the impression that you are discussing overtime in the context of Indian labor laws. All replies are focused on overtime provisions under Indian labor laws, which are different from the global work culture and practices, particularly in Europe, North America, USA, Australia, China, and Japan, where total weekly working hours are 40 hours, and people are paid overtime or given compensatory time off in lieu of overtime spent in the office/workplace.

In India, we have a different practice of 48 mandatory weekly working hours, and anything above that is considered paid overtime, which is also subject to unionized employees (Non-Exempted employees according to Western practice) in the organized sector.

Otherwise, in general, employees from the staff or middle management who are not unionized employees (Exempted Employees according to Western practices) are eligible for compensatory time off, similar to the Western concept.

We justify the above case by quoting fortunate employees from the organized sector working in PSU/MNC/PLC/IT companies who enjoy better working conditions with a unionized workforce where more liberal HR practices are in place. Legally, everything is fine in the recorded books, but in practice, nothing exists. We find that the law exists, enforcement machinery also exists to fill in the blank space, but the working class at large has no respite.

Other Side of the Story: "The greatest discovery of the third world"

Majority of the Indian companies, particularly medium-scale and small-scale industries, have the largest unorganized labor force in India, and they are not unionized, including the booming infrastructure and construction industry.

Working hours in this sector, where the majority of the workforce engagements take place, have no maximum limit for weekly working hours, and 48 hours of work are interpreted as the minimum weekly working hours being mandatorily enforced by labor laws and are religiously enforced in every quarter, right from small shops to corporate offices. However, for maximum working hours, there is no limit.

In such non-unionized sectors and unorganized employment, no law works. Working overtime without remuneration is linked to loyalty, integrity, and hard work without any promise to reap benefits in the future. Employees have to forfeit their claim because if an employee opts for legal recourse, they will be shunted out the very next day.

On average, an Indian works for 10 hours a day and 60 hours a week, averaging 12 hours including commuting and office attendance. This is a subject of research in India regarding what exactly the Government has done to promote a balance of working hours and social life.

Regards,

Sawant

Dear All,

I want to know if the wages of some tailors in our organization are ten thousand Rupees, will overtime be applicable or not? I also seek clarification on exempt employees and non-exempt employees. Please explain... Tailors, checkers, packers, receivers, and assistant supervisors are exempt employees.

Thanks & Regards,
Brijesh

Dear Sir,

I am working in a security service organization. We pay the wages to our guard force as per the minimum wage notification prevailing in the state. I have the following queries:

1. If any guard performs overtime, can we pay him double the basic wage (where basic is 50% of his wage for an 8-hour duty)?
2. If yes, what justification can we provide?

Please help with your valuable advice in this regard.

Thank you.

Dear All,

I am working in an engineering firm. I just want to confirm whether OT rates are fixed for each month or variable based on the number of days in a month.

For example, if anybody is earning Rs. 8000 per month and we have to calculate the per-hour overtime rate, in the month of June (30 days), the rate would be 33.33, and in the month of July (31 days), the rate would be 32.25 (8000/31/8).

Please help me clarify these issues.

Thanks & Regards,
Aanchal