Daily wages worker Overtime - If someone works more than 8 hours a day

Respected sir,

In a company where the Factory Act is followed, every week workers have a holiday on Sunday. On other days, they have compulsory work for 8 hours each day, totaling 48 hours of duty per week. If someone works more than 8 hours a day, that individual receives overtime at double the rate. However, there are queries regarding daily wage workers' overtime as follows:

1. If we exclude Sunday, there are 6 working days in a week. With 8 hours of work each day, the total weekly duty hours are 48. If someone is absent, only 40 hours are counted for the 5 days they work. If they do overtime of 4 hours every day, 20 hours are considered. In that week, how many hours will they receive overtime at double rate and how many times at single rate?

2. In March 2022, the first week starts on Tuesday and ends on Saturday. From March 1st to March 5th, there are 5 working days. This means 40 hours of work in the first week. If someone is absent during that time, 32 hours are counted. If overtime of 4 hours is done every day, 16 hours of overtime are considered that week. My question is, how many hours will be counted for overtime at single rate and how many times at double rate?

3. In March 2022, the last week starts on Monday, March 28th, and ends on Thursday, March 31st. There are only 4 working days in that last week. If overtime of 4 hours is done every day, there will be 16 hours of overtime. How will the rate of overtime be calculated in this situation?

Thank you.

Dear Rajendra,

First, the OT is payable for exceeding the timing, 8 hours a day or 48 hours a week, whichever happens earlier. So if a person is absent, it does not reduce his claim of overtime on other days.

Secondly, the 48 hours applies to a calendar week, so it is immaterial whether the month starts on a Monday, Tuesday, or any other day.

Third, if you have someone doing 4 hours of OT every day, you are heading for trouble. Please note that there is a restriction of 48 hours of overtime in a month (some states took it to 115 hours a month). Furthermore, a person doing overtime every day is assumed to have a 12-hour work shift, which is illegal and will invite prosecution.

Hello,

Thanks for the response; it was really helpful. I'm having a few more queries:

1. To get double overtime rate, is it compulsory to work 48 hours every week in normal working hours? If 48 hours of normal work is not completed in a week, would the hours of overtime, which are paid less in a 48-hour period, be considered at the single rate?

2. In March 2022, when does the first week start and end?

Thank you.

As per the Factories Act, 1948, there is a concept of single-hour OT. As per Sec-59, it is clearly mentioned that if a worker works in a factory for more than nine hours in any day or for more than forty-eight hours in any week, he shall, in respect of OT work, be entitled to wages at the rate of twice his ordinary rate of wages.

In the instant case, if any employee works for 40 hours in a week and stays 4 hours extra for 4 days, then his total hours of work including OT will be as follows:

5 days normal work = 5 * 8 = 40 hrs.
4 days OT @ 4 hrs per day will be 1 single hour and 3 double hours = 1 + 3 * 2 = 7 hrs per day instead of 4 * 2 = 8 hrs per day. Therefore, the total hours of payment in the week will be 40 + 7 * 4 = 68 hrs instead of 40 + 4 * 4 * 2 = 72 hrs.

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As per the Factories Act, a worker is to be paid double the rate of wages for work beyond 48 hours in a week. Now:

1. If one is absent in a week, he will get OT rate only for the hours which exceed 48 hours. If he works four hours extra every day, then he should have worked for 12 X 5 days or 60 hours in that week. Of this, 12 hours will qualify for Overtime at double the rate. Obviously, 8 hours in that account will qualify for a single rate of wages.

In the case of an employee who is eligible to leave with pay, however, the day he is absent on leave with pay basis will be counted as a day worked. In his case, even if he has worked only for 5 days, he will get overtime wages at double the rate because in his case, he is said to have worked for 48 hours in that week excluding overtime hours as one day will be paid leave.

2. The decision regarding overtime hours should always be on a weekly basis. Therefore, if the 1st day of a month starts in between a week, you have to take the hours from the beginning of the week, say from Monday to Saturday.

3. Calculation of wages being on a weekly basis, the days of April coming in the last week of March will qualify for wages in that week itself.

In the case of employees whose wages are paid monthly, there is another way of computing OT. That is to prorate weekly hours. In this case, if the first week of March commences on Tuesday and accounts for 5 days, then OT at double the rate will be fixed as payable for hours exceeding 40 hours. Similarly, if the month ends on Thursday, with 4 days, that week may be taken as a week with a minimum working hours of 32 and any hours in excess of 32 will earn overtime wages at double the rate.

Sec-59 - Extra Wages for OT under Factories Act 1948 -

Where a worker works in a factory for "more than nine hours in any day" or "for more than forty-eight hours in any week," he shall, in respect of overtime work, be entitled to wages at the rate of twice his ordinary rate of wages.

Therefore, there are two conditions - one on a daily basis and another on a weekly basis. For example, if a worker has worked for 5 days instead of 6 days, and on all 5 days, the worker worked for 12 hours each day. It appears that the normal working hours in the week are 5*8 = 40 hours, and the extra work is 4*5 = 20 hours. The calculation is based on exceeding 48 hours in a week, which will be considered as OT hours. In this scenario, the worker will be eligible for 40 + 8 = 48 hours at the single rate of payment, and 12 hours at double the rate of payment, i.e., 12 * 2 = 24 hours. Therefore, the total hours of payment will be 48 + 24 = 72 hours.

Let us now calculate on a daily basis. In this case, the worker will earn normal hours for 5 days of work = 5 * 8 = 40 hrs at the single rate. 1 hr at the single rate for 5 days = 1*5 = 5 hrs, and 3 hours at double rate = 3 * 2 * 5 = 30 hrs. Therefore, the total hours of payment will be = 40 + 5 + 30 = 75 hours, which is more than the 72 hours as shown above.

The reason for having two conditions (daily basis and weekly basis) is not to deprive the worker. In the above example, the worker will receive 3 hrs (75 - 72) of extra payment.

I am unsure whether the daily clause for calculating OT under the Factories Act has been removed or if there is any court case supporting the calculation of OT based only on a 48-hour weekly basis. If there is any information on this, please let me know.

I will now share my experience of calculating OT in most organizations in India. The majority of organizations do not check the weekly 48-hour conditions or the daily 9-hour condition; instead, they pay OT based on extra work beyond 8 hours in any day. The worker benefits, and no legal issues arise if the payment exceeds the statutory requirements.

Whether the worker is paid on an hourly basis, daily basis, monthly basis, piece rate basis, etc., it is necessary to determine the hourly rate, and the payment should be made accordingly.

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In establishments that operate for 5 days a week, it cannot be insisted that the weekly working hours be 48 hours. In Philips India Ltd Vs Labour Court, Madras & Others (1985 AIR 1034), the Supreme Court ruled that if a company has set the total working hours at 39 hours per week, any additional hours worked beyond 39 should be compensated with overtime wages. However, this does not imply that overtime wages at double the rate must be paid for hours exceeding 39. The company had specified that any extra hours beyond 39 would qualify for 1.5 times the normal wages as overtime wages, and that is what should be paid. Moreover, any work exceeding the statutory limit of 48 hours should be eligible for overtime wages at double the rate.

Original post was related to factory and single-hour and double the rate OT. The reference Philips India case is related to the Sales Office at Madras, which was a Commercial Establishment. I was an employee of Philips India from 1988 to 1994 in the capacity of Personnel Officer and Personnel Manager. I know the matter in detail.

Here the question is when any worker works for less than 48 hours in a week (say for 3 days in a week) and does extra work for another 3 days, maybe four or five hours per day as OT, in that case how to calculate OT hours.

In the above case, 3 days of normal hours, i.e., 8 hours per day, and for extra work, 1 hour single rate and the rest of the hours at double the rate. Therefore, the worker will be eligible for 3 days absent as leave pay if there is leave credit for the worker; otherwise, it will be treated as LWP. There will also be cases when including OT hours, the total hours in a week will be less than 48 hours. For example, if any worker works for 3 days, i.e., 3 * 8 = 24 hours of normal work and extra work 4 hours per day, i.e., 4 * 3 = 12 hours, then the total working hours will be 24 + 12 = 36 hours - less than 48 hours in a week.

Any paid leave will not be considered as 8 hrs working. It will be paid as leave pay instead of working hours.

Therefore, as per the Factories Act, 1948, there must be a calculation of OT on a daily basis other than 48 hours in a week to ensure proper justice for the worker.

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Very true. But the dictum of this verdict shall be applied here also because, in respect of working hours and overtime, the interpretation in the Factories Act is similar to the Shops Act. Moreover, while ruling this verdict (Philips India case), the court has cited a similar situation in Indian Oxygen Ltd Vs Their Workmen.

The case laws referred to have no relevance to Sec-59 of the Factories Act, where a worker works in a factory for more than nine hours in any day.

The particular clause has not been deleted by any amendment from the Factories Act, 1948. The purpose of calculating OT under the Factories Act is when a worker works either more than 9 hours in a day OR forty-eight hours in a week. This calculation is for instances when a worker is absent within the week or on a paid holiday when it is not possible for the worker to complete 48 hours of work in that week. Additionally, the worker should not be deprived of extra work on any day for not fulfilling the 48-hour condition in a week.

Regarding the question raised by Mr. Rajendra Sindhe about a worker working for 5 days with an additional 4 hours of work each day, the total hours to be paid would be 75 hours for the week based on the calculation of more than 9 hours per day, instead of paying OT after 48 hours of work, which would total 72 hours for the week. The calculation has been detailed in my earlier post.

In my 46-year professional career (1976-2022), I have encountered many HR professionals who do not understand the concept of single-hour OT properly. They neither follow the 48-hour concept per week nor the 9-hour concept per day; instead, they pay OT for extra work beyond normal working hours at double the rate.

I am aware of two organizations, both MNCs - Pfizer and Vesuvius, that initially had a 5-day workweek in the factory but later transitioned to a 6-day workweek after negotiating with the Union/Workers using an innovative formula of 6 days of work and 2 days off.

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