Overtime pay = hourly rate × 2 × overtime hours, where the hourly rate is the monthly wage ÷ the days used for the daily rate (26 is the most common) ÷ normal hours a day (usually 8). Section 14 of the Code on Wages, 2019 requires overtime at not less than twice the normal rate of wages for every hour or part of an hour beyond a normal working day. Example: ₹18,000 a month ÷ 26 ÷ 8 = ₹86.54 an hour, so 20 hours of overtime is ₹3,461.54.
How overtime is worked out
- Find the wage for overtime. Most employers use the ordinary rate of wages: basic plus dearness allowance. Some include fixed allowances; follow your appointment letter, policy or State rule.
- Turn it into a daily rate. Divide the monthly wage by the days your policy uses. Many State minimum wage notifications use 26 days.
- Turn the daily rate into an hourly rate. Divide by the normal hours in a day, usually 8.
- Double it. The overtime rate is at least twice the hourly rate. A policy may pay more, never less.
- Multiply by the overtime hours in the wage period, counting part hours.
Worked examples
| Case | Working | Overtime pay |
|---|---|---|
| Store helper on ₹18,000 a month, 20 hours of overtime | ₹18,000 ÷ 26 ÷ 8 = ₹86.54; × 2 × 20 | ₹3,461.54 |
| Haryana unskilled worker at the minimum ₹15,220.71, 10 hours | ₹15,220.71 ÷ 26 ÷ 8 = ₹73.18; × 2 × 10 | ₹1,463.53 |
| Daily-rated worker on ₹600 a day, 6 hours | ₹600 ÷ 8 = ₹75; × 2 × 6 | ₹900 |
If the same ₹18,000 employee's policy uses 30 days, the hourly rate is ₹75 and 20 hours pays ₹3,000. Choose one method and use it every month.
Limits and records
- Normal working hours, the spread-over and the maximum overtime allowed in a day or quarter are set by the Occupational Safety, Health and Working Conditions Code, 2020 and State rules, and for shops by the State's shops and establishments law. Check your State before rostering long overtime.
- Overtime needs the worker's consent in many States, and some require a register of overtime.
- Pay overtime in the same wage period as the work, on the payslip as a separate line.
- Overtime counts towards gross wages for ESI; check with the ESI calculator.
Compare normal pay with the State rate on the minimum wages by state page.
Overtime from attendance, not from memory
Overtime disputes start when hours are noted on paper. FundRaksha HR records check-in and check-out on the employee's phone or a biometric device and runs payroll with PF, ESI and professional tax, so the hours on the payslip match the attendance. For a single payslip, use the salary slip generator.