How Do You Efficiently Track and Calculate Employee Overtime? Seeking Advice!

Dear Seniors,

Can any of you help me on how to calculate overtime for the employees?

Currently, we use a card system where employees record their in and out timings along with their signatures every day. These details are then submitted to HR at the end of each month. Overtime is calculated based on the extra hours worked.

I am wondering if there is a more efficient way to record overtime. Could anyone suggest a better method or perhaps a simpler solution to this?

Regards,
Fay

Dear Fay,

Overtime (OT) is calculated based on Gross Salary. For example, 'A' has worked for 20 extra hours during the month. His gross salary per month is Rs. 2000. Therefore, what would be his OT?

Calculations:
- 2000 / 26 = 76.92 salary per day
- 76.92 / 8 = 9.61 salary per hour
- 9.61 x 2 x 20 = 384.40 OT of Mr. 'A' for 20 hours.

Normally, OT is given double as per the Factory Act of 1948. I hope this solves your problem.

In terms of maintaining your OT record, you should consider using proper payroll software or generating a manual record.

Sameer

Dear Sameer,

I am looking for a way to simplify the calculations of OT hours. However, this will not work in the payroll software as it includes both temporary and permanent employees.

Thank you.

Be careful; you are supposed to only consider Basic + DA (if applicable) while computing for OT. Rest all components are not to be considered.

As far as the procedure for calculating OT is concerned, please ask for a written approval from the concerned employee's supervisor (duly acknowledged by the Dept. Head) before going ahead with calculating the OT for the extra hours the employee has put in. Also, ensure that this is brought up during Manpower planning discussions with the Functional Head. If it's just seasonal or a temporary requirement, it's okay. But if the need is due to expansion, it's better to hire more people.

Thirdly, payment made by way of OT is fully taxable.

Dear All,

To be more specific about my problem, I want a procedure on how to follow the OT recording, and not OT calculations. Please reply at the earliest. If I get a suitable solution, I can implement it from January 2008.

So please help. It is very, very urgent.

Regards,
Fay

Hi,
Why don't you prepare an Excel sheet to record the data? You can easily calculate OT hours and OT amounts by using Excel functions. It will take some time initially to prepare the sheet and formulate the necessary formulas, but once you set it up, there won't be any further trouble. We used this system in my previous job.
Regards,
Rupali

Hi Rupa,

At present, we have cards issued to all the employees. They write in their in-time sign & out-time sign, and at the end of the month, the department head signs the OT card & sends the cards for OT hours calculations. I want a simple procedure for this. Is there any better and easier way to do this? Urgent help required.

Dear Fay,

I am not in HR but have completed PGDM in HR and have work experience. I think the better way to maintain the OT is to keep a record of logged-out time from the system. There should be some ID given to the employees, and when they log in to the system and log out, the time should be maintained. This way, you can determine the better working hours (OT) with productivity.

If you are using the method of sign-in and sign-out time in the register, it might create some variance of which you are not aware. Anyone can take advantage of it. In our organization, the software we use provides login time, log out time, and we refer to it as TOS (Time on System), including breaks.

If you don't have any software like this, then the Team leader should keep track of these details and send them to HR at the month end. I think it will help you.

Prativa

Hi,

Temporary staff must report to someone. The supervisor should record the clock in and out times from the system and keep track of them. Take reports from them as well as from the register so that you'll know the variance.

Prativa