Contract Workmen Overtime: How to Legally Reflect OT on Paysheets Without Issues?

Dear All, We have contract workmen working more than 50 hours monthly. As per the law, the OT shall not exceed 48 hours in a quarter. How can we show the OT on a paysheet to avoid legal issues while ensuring that both the employee and employer do not suffer? Can anybody please explain?

I think there is some confusion; instead of a month, probably the quarter is mentioned.

Working Hours and Overtime Regulations

The normal weekly hours of work are 48 hours (6 X 8). However, the Act further provides that the daily working hours shall not exceed 12 hours. This means every day 4 hours of overtime can be taken, but the weekly working hours shall not cross 60 hours. Thus, 48 hours (12 hours X 4 weeks) of overtime can be provided in a month. Similarly, the quarterly overtime should be restricted to 50 hours in case State Government Rules provide for it or 75 hours with permission from the State Government. No employee should continue overtime for more than 7 days at a stretch.

Thank you for your prompt reply. They are working more than 50 hours of overtime apart from the normal working hours in a month. Most of them are working an extra 4 hours every day. According to the law, overtime hours cannot be extended beyond 50 hours. Now, to safeguard the employees and the company's interests, is there any way we can document the overtime and pay for employees to avoid legal issues?

Please advise.

Regards, Hanuma

There is no way to hide the fact. If any employee meets with an accident during the OT hours and you hide the fact, then the situation will be complicated. If the employee is covered under ESI, it will be further complicated.

The way out is proper manpower planning and to bring down the OT hours.

Thanks & Regards,

S. K. Bandyopadhyay (WB, Howrah) CEO USD HR Solutions

Overtime Regulations and Shift Management

Just because 50 hours of overtime (OT) per quarter is allowed does not mean you can make them work 12-hour shifts under the guise of paying overtime. You need to focus on stopping 12-hour shifts and double shifts. These should be exceptions, not the rule.

How to Show Overtime (OT) in a Paysheet

Maintaining records in a truthful manner is the safest way. OT cannot be hidden, as it is governed by the Factories Act and state amendments. Following rules ensures legal safety. Workers may be pleased with higher wages and overtime work, but it may come at the cost of health, safety, and fatigue.

Additionally, your payroll will always reflect the amounts paid and can be correlated with OT hours. Hiring temporary staff can help prevent OT from exceeding the laid-down limits. Seek permission from Factory Inspectors to the extent permissible.

Safe and legally correct documentation is the only right way to proceed.

Ensuring Safety During Overtime

The solution remains with you if you can ensure that no accidents, untoward incidents, or injuries would happen to workmen while on overtime. It is certain to believe that neither you nor anyone can ensure such a thing. Therefore, it would be fair and beneficial for the industry to pay the workmen overtime legitimately.

Addressing Regular Overtime

Furthermore, overtime has become a regular occurrence where fewer workers are engaged than the actual requirement. It is essential to address this issue as paying overtime is more costly than the payment of normal wages. In the case of a temporary requirement for a certain period, you can seek permission from the Inspector of Factories & Boilers, stating that a time-bound order needs to be completed, requiring excess overtime.

Predicting and Controlling Accidents During Overtime

How can one predict when an accident will occur, let alone control it while working overtime (OT)? Overtime is resorted to not only due to a lack of manpower planning but also because of material shortages, delayed supply of components, deliberate absenteeism, sudden power cuts, etc. However, one must show a compliant attitude when resorting to working overtime.

Regards,
Vinayak Nagarkar
HR and Employee Relations Consultant

Dear All, thank you so much for your valuable replies. As a professional, I also know that doing more overtime will lead to more problems. However, management is the ultimate decision-maker. After suggesting that higher overtime will lead to problems, if they simply ignore it, what can HR do?

Thank you, Mr. Vinayak Nagarkar, for your valuable suggestion.

Regards,
Hanuma

It is time for HR, not only in your company but also elsewhere, to start asserting. Labor is the smallest and weakest among the various factors of production. HRM needs to focus on HR development, which involves the physical and mental well-being of employees in the long run. Therefore, we must put an end to exploitation by insisting on engaging additional labor and ensuring that overtime (OT) is not avoided with compensatory off (comp off) due to long misuse. Overtime should be paid as per the law and not on a per-hour basis fixed arbitrarily. I always advocate a return to following labor laws in the true spirit to do justice to labor, whose support from trade unions has weakened.

Thank you for your attention to these important matters.

Sincerely, [Your Name]

To be legally compliant, you have to follow a balanced outlook.

Overtime Rates and Legal Compliance

Please note that OT rates are double as: Under Sec. 59, it is mentioned that where a worker works in a factory for more than 9 hours in any day or for more than 48 hours in any week, he/she shall, in respect of overtime work, be entitled to receive wages at the rate of twice his/her ordinary rate of wages.

Thus, if you have 100 employees, you are paying approximately Rs. 1,27,800 per day, including overtime, based on a Central Minimum wage of Unskilled daily wage of Rs. 639.

Calculating Overtime Wages

The hourly daily wage is Rs. 80, and hence the OT rates will be Rs. 160. Therefore, the daily wage for Unskilled will be Rs. 1278 (for 4 hours OT in addition to 8 hours normal working day).

Implementing Shift Work

It would be ideal to introduce SHIFTS of 8 hours in your establishment with 50% of employees coming in 2-3 hours early from the next shift. In addition, if you feel that you need full strength for a given shift, you can recruit more employees for the shift in proportion and still pay the same daily wage for all employees to the extent that you will be paying overtime.

The greatest benefit will be more productivity and employment for many.

Please, seniors, correct me if I am wrong.

If it is a one-time occurrence, you can show it as OT and explain the reasons to the inspector. If it is a recurring issue, excess OT hours should be stopped immediately. There should be no manipulation of records.

Regards, V. Aswath Hari
Advocate and HR Consultant

Understanding OT Rules

The OT rules are governed by the Shops and Establishment Act of the respective state where your employees are working. Please let us know the state where your employees are working so that we can advise on it.

Different states have different OT rules.

Understanding Overtime Regulations

The issue of overtime is relevant to extra working hours under certain crucial circumstances. This can be understood by a combined reading of the Shops and Establishments Act and sections 59, 64, and 65 of the Factories Act. It concludes that the implementation of overtime itself needs prior permission from concerned authorities beyond the stipulated work hours and under certain exigencies.