Should Lunch Breaks Count in Monthly Working Hours for Earned Leave Pay? Let's Discuss!

We currently have a system where we pay one earned leave in cash each month to our staff once they meet their target working hours. Any hours worked beyond these target hours are then converted into days' pay, which is also compensated.

Calculation of Daily Working Hours

However, a question has arisen regarding the calculation of daily working hours. If the working hours per day are 8, inclusive of a half-hour lunch break, should we include this lunch break in the calculation of working hours, or should it be excluded?

For example, in June 2025, excluding Sundays, we have 25 working days. Should the total working hours be calculated as 25 days times 8 hours (200 hours), or should it be calculated as 25 days times 8.5 hours (212.5 hours) to account for the lunch break?

Regards

In calculating monthly working hours for earned leave cash compensation, it is common practice to include the lunch break time in the total working hours. This ensures that employees are compensated for the entire duration they are required to be present at work. Therefore, when determining the total working hours for the month, you should consider the lunch break time as part of the working hours. In your scenario with 8-hour workdays inclusive of a half-hour lunch break, the calculation for total working hours in June 2025 should be 25 days multiplied by 8.5 hours, resulting in 212.5 hours. This approach aligns with fair compensation practices and respects the time employees dedicate to their work duties.

Your current system is to pay one extra day's wages in cash if the set target is achieved without working overtime.

1. The earnings cannot be treated as earned leave. This is rather a production incentive but not recorded in the books. Thus, it is an unethical work practice if it does not have a documented policy.

2. Any hours worked beyond the normal working hours are then converted into days, and the workmen are compensated by paying for the period.
**Exp:** The extra working hours beyond the working shift are called overtime. The overtime rate is double the ordinary wage rate. Therefore, it is illegal if payment is not made at double the rate.

3. The daily working hour is 8 hours exclusive of break hours, which may be 30 or 60 minutes as per the company's policy.
**Exp:** Break hours cannot be calculated as working hours. Your 25 working days sum up to 200 hours but cannot be 212.5 hours. Therefore, a standard eight-hour workday in India, as per the Factories Act, 1948, is generally understood to exclude break hours. The act stipulates that a worker cannot work for more than 9 hours a day and 48 hours a week, including a mandatory rest or meal break of at least 30 minutes if working more than 5 hours.

Please adhere to the Act and rules to avoid unpleasant situations in the future.