Calculation Of Overtime.

Dear experts,
My query :
1. We pay according to 26 days and calculate overtime on same base ( 26 days). Recently in audit query was raised by auditor i.e overtime should be calculated on 31 days.
Please clear the picture with legal law reference .
Thanks

In legal point of view, wages will be calculated on worked days (26) + weekly paid offs (4). For eg: payment of gratuity act, Minimum wages act.
Can you ask them on what basis they are asking to calculate on 30/31 days basis? If you calculate in this way, the OT payable amount will be slightly reduced. May be they might be insisting it on cost saving factor for the company.

Dear Saraiya,

The term " month " has several meanings.

As a stretch of a period of time from the perspective of an year, it is one of the twelve periods into which an year is divided and therefore each would be having 28 or 29 to 31 days.

In Commerce, it is a period of 30 successive days.

As unit of time based on the revolution of the Moon around the Earth, it is the period between two successive new moons or on average 29.53 days.

The length or duration of a month, therefore, is a matter of approximation for the purpose of convenience of calculation.

As per your post your payment is for a month comprising of 26 days i.e., 26 working days plus 4 holidays in a month notionally comprising of 30 days on average. In other words the monthly wages/salary paid for 26 working days includes the 4 weekly off days. Since a week is cosidered to comprise of 7 days in terms of days, the principle of 7th successive day after 6 days of continuous work as the weekly-off has emerged.

The universal practice of calculation of over time work is based on actual hours worked in excess of normal working hours, isn't it? So, compensation for OT work is determined on the basis of hourly rate only and as such the actual no of days in a particular month, in my opinion, is immaterial for the purpose of calculation of OT Wages.

To arrive the wages per day for the purpose of payment of over time wages should be divided by 26 days only as per provisions of act. As there is no deviation or interpretation to this since it is already written in the Act. Non compliance of this, it will be the violations For the purpose of wages salary per day the same should be divided by 30 or 31 following month salary payable
Adoni Suguresh
Labour Laws Consultant .