Dear Kumaraswami,
I may not be wrong if I say that a certain degree of situational management is required from a seasoned manager to avoid such a question of law arising out of an extraordinary fact situation.
First and foremost
How was the employee allowed to the shift two hours late? Had he not been allowed, the question would not have come up.
Second
Whether the delay was condoned by the manager because the work was of such importance and possibly could be completed within the remaining hours of the shift.
Third
Whether the urgency of the work made the manager require the employee to work beyond his normal shift hours.
If the answers to the last two questions are "yes," in my opinion, the employee should be paid OT wages without linking his late attendance for that particular shift.