How Do You Calculate Overtime Wages for Staff? Seeking Advice from Experienced Peers

Greetings Seniors,

Can anyone in this forum tell me how to calculate wages for staff for overtime work done? Hoping for a favorable response.

Regards,
Ritu

Dear Ritu,

Calculation of OT wages is done based on the payment model you adopt when paying them, whether you have appointed your labor on a piece wage, daily basis, or hourly basis. If it is done on a daily basis or hourly basis, then it is as simple as converting the entire wages into hours. However, if it is a piece wage system, then conversion is done based on the pieces to be completed in one day.

The standard working hours are 8 hours, so anything exceeding that is subject to OT as per the law.

Dear Ritu,

I think it depends on company policy. If it is related to workers, then you have to pay double the rate of wages. For staff, you can discuss with your accounts department. Normally, companies don't give payment to staff for overtime; instead, they provide compensatory leave. However, many companies do pay overtime to staff proportionately to their normal salary.

Thanks

Dear Kumar H P,

The formula you have written is not very clear. Could you please clarify it?

[left(frac{{(text{Basic} + text{DA}) times text{No of Overtime Hours Worked}}}{{text{No of Working Days} times text{No of Working Hours}}}right) times 2]

Is the "No of overtime hours worked" referring to the total overtime hours worked by the worker in a month, or is it something else?

Thank you.

Yes.

[((Basic + DA) times text{No of Overtime Hours worked}) / (text{No of Working days} times text{No of Working Hours}) times 2]

Look at this example:

Basic + DA = Rs. 2440

Total number of Overtime hours worked in a month - 12 hours

Total number of Company working days in a month - 26 (in some cases 30)

Total number of working hours - 8 hours

Now OT is calculated as below:

[[text{(2440} times 10) / (26 times 8)] times 2 = 234.6]

Hope it is clear now.

Truly Yours, Kumar.H.P

Dear Ritu,

I think the calculation of wages is as follows:
Total salary/wages/number of days * actual working days with leaves.
Overtime calculation:
Total salary/wages/240 (for the month of 30 days) & 248 for (the month of 31 days) * total hours.

I hope you are satisfied with my answer. If I am wrong, please tell me.

Thank you,
With regards,
Neha

Hi everybody,

Can someone guide me on the payment of double wages for working on national holidays? In the current practice in my organization, they pay twice the ordinary rate of wage plus the ordinary wages. Is it mandatory to pay thrice the ordinary rate of wages for working on national holidays under the Shops and Establishment Act? Kindly clarify.

Subhashinee L

Hello Kumar,

What do we do when there are no 31 or 28 days in a month? How do I calculate OT hours? Can we divide by 26 (in case of a 30-day month) or what should we do when the number of days is 31?

The formula for calculating OT is:
[left[left(text{{Basic}} + text{{DA}}right) times left(frac{{text{{No of Overtime Hours worked}}}}{{text{{No of Working days}} times text{{No of Working Hours}}}}right)right] times 2]

Let's consider an example:
Basic + DA = Rs. 2440
Total number of Overtime hours worked in a month = 12 hours
Total number of Company working days in a month = 26 (in some cases 30)
Total number of working hours = 8 hours

Now, OT is calculated as follows:
[left[left(frac{{2440 times 10}}{{26 times 8}}right)right] times 2 = 234.6]

I hope this clarifies things.

Truly Yours,
Kumar H.P

Hi all,

OT should be paid based on Basic and DA and not on any other allowances given to the employee. OT should amount to double the wage, i.e., (Basic + DA).

Calculation:
OT = (Basic + DA) / 26 days = per day wage
Per day wage / 8 Hrs = per Hr. wage
Per Hr. wage x OT Hrs x 2 times = OT amount to be paid.

OT should be paid at 2 times the Hr. wages as per the current Factory Act.

OT should not only apply to factory workers but also to staff of middle management cadre who dedicate extra hours on any given day of the month.

Some organizations provide a lump sum allowance to staff for their additional duties.

Mohan Rao
Manager HR

Dear H.P.

Section 59 of the Factories Act states that overtime wages will be calculated at 200% of Basic Wages, along with all the allowances to which an employee is entitled, and the cash equivalent of food concessions excluding Bonus and Overtime wages. This means that any other allowance will also be included in the overtime calculation, such as medical allowance, uniform allowance, House Rent Allowance, and so on. Could you please shed some light on Section 59?

Thank you.

Dear all,

It's urgent. Can anyone help me with overtime hours calculation? It is as follows: per month 26*8= 208 hours. Any hours over 208 are considered overtime. Or, on a daily basis, 1*8= 8 hours, with any hours over 8 being overtime. For a weekly calculation, 8*6= 48 hours, with any hours exceeding 48 being overtime.

As I am a contractor, I expect the principal employer to calculate on a daily basis for my profit. Section 14 rule 26 also mentions this.

Is there any rule for monthly overtime hours calculation? If so, please forward it to me.

Jayraj
09890141140

Would it be correct to calculate OT in this way:

Normal work week permitted under my country's law: 52 hrs Therefore: Normal working hrs per month (for a month of 30 days): (30/7) * 52 = 222.857 hrs If my employee earns a monthly salary of 50,000 and has worked 238 hours in that month. OT hrs: 238-222.857 = 15.143 Overtime pay: Monthly salary/ no. of working hrs per month = hourly rate 50,000/222.857 = 224.359 per hour 1.5*224.359 = 336.539 OT Payment: 15.143*336.539 = 5,096.20 Therefore, my employee will take home 50,000 + 5,096.20 = 55,096.20

Overtime Calculation Under Different Acts

Need your help on overtime calculation. Our establishment is registered under the Bombay Shops Act, and our contractors are also registered under the Shops Act. Payments are made by the contractor to the staff as per the Schedule Employment rate declared by Maharashtra.

Query: Applicable Act for Overtime Calculation

My query is under which Act overtime has to be calculated: either under the Shops Act or the Minimum Wages Act.

Relevant Sections from the Shops Act

Subject to Subsection (1) of Section 14: "No employee shall be required or allowed to work in any shop or commercial establishment for more than 9 hours in any day and 48 hours in any week."

(2) Any employee may be required or allowed to work in a shop or commercial establishment for any period in excess of the limit fixed under Subsection (1), if such period does not exceed 6 hours in any week.

*Section 17: The spread-over of an employee in a commercial establishment shall not exceed 11 hours in any day.

Relevant Sections from the Minimum Wages Maharashtra Rules

Rule 24 (1): The number of hours of work which shall constitute a normal working day in the case of an adult is 7 hours, excluding an interval for rest of 1 hour.

Rule 26 (1): Where an employee in any scheduled employment works for more than 9 hours on any day or 48 hours in any week, or for more than the hours of work notified under Subrule 24, as the case may be, shall in respect of overtime work be entitled to wages at double the ordinary rate of wages.

In short, which Act will prevail: will the Shops Act prevail over the Minimum Wages Act, or will the Minimum Wages Act prevail over the Shops Act? Kindly revert with valuable advice.

Regards,
Azim Charania.