The Indian Labour Laws signify the rights and interests of the labour in our country. Sadly, the majority of employers and employees are oblivious to a broad range of provisions governing their rights, privileges, and duties under the Indian Labour Legislation. One such provision is the concept of Overtime wages.
Although, there are various labour legislations that govern the number of overtime hours, and the method for calculating them; the concepts still seem incomprehensible to the majority of the working sector.
A brief outline of Normal Working Hours is necessary to understand the concept of Overtime.
What are Normal Working Hours?
Normal Working Hours under the Indian Labour legislation are the prescribed number of hours that employees need to complete their shifts. Following are the provisions under various labour laws that talk about normal working hours:
1. Factories Act, 1948
(a) Section 51 – Weekly Hours
“No adult worker shall be required or allowed to work in a factory for more than forty-eight hours in any week”.
(b) Section 54 – Daily Hours
“No adult worker shall be required or allowed to work in a factory for more than nine hours on any day.”
2. Minimum Wages Act, 1948
(a) Section 13 – Fixing Hours for a Normal Working Day, etc.
“In regard to any scheduled employment minimum rates of wages in respect of which have been fixed under this Act, the appropriate Government may (a) fix the number of hours of work which shall constitute a normal working day, inclusive of one or more specified intervals.”
Provision on Overtime Wages / Payment – A Diverse Outlook
In legal parlance, “Overtime” is any number of hours worked by an employee in excess of the normal working hours. Various labour legislations specify the total number of working hours including overtime.
For example, Karnataka Shops and Commercial Establishments Act, 1961, says that the total number of working hours, including overtime, shall not exceed 10 hours a day. In other words, if an employee works more than 9 hours, it’ll be considered Overtime. Such employees are entitled to receive overtime payments as prescribed by the law.
Following are the provisions on Overtime and the important supplementary provisions under various Labour Legislations:
1. Factories Act, 1948
(a) Section 59 – Extra Wages for Overtime
“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.”
(b) Section 55 – Intervals for Rest
“The periods of work of adult workers in a factory each day shall be so fixed that no period shall exceed five hours and that no worker shall work for more than five hours before he has had an interval for the rest of at least half an hour.”
(c) Section 56 – Spread Over
“The periods of work of an adult worker in a factory shall be so arranged that inclusive of his intervals for rest, they shall not spread over more than ten and a half hours on any day.”
2. Minimum Wages Act, 1948
(a) Section 13 – Fixing Hours for a Normal Working Day, etc.
“In regard to any scheduled employment minimum rates of wages in respect of which have been fixed under this Act, the appropriate Government may provide for payment for work on a day of rest at a rate not less than the overtime rate.”
(b) Section 14 – Overtime
“Where an employee, whose minimum rate of wages is fixed under this Act by the hour, by the day or by such a longer wage period as may be prescribed, works on any day in excess of the number of hours constituting a normal working day, the employer shall pay him for every hour or for part of an hour so worked in excess at the overtime rate fixed under this Act or under any law of the appropriate Government for the time being in force, whichever is higher.”
3. The Mines Act, 1952
(a) Section 33 – Extra Wages for Overtime
Where in a mine a person works above ground for more than nine hours on any day or works below ground for more than eight hours on any day or works for more than forty-eight hours in any week, whether above ground or below ground, he shall in respect of such overtime work be entitled to wages at the rate of twice his ordinary rate of wages the period of overtime work being calculated on a daily basis or weekly basis whichever is more favourable to him.
4. The Building and Other Construction Workers (Regulation of Employment & Conditions of Service) Act, 1996
(a) Section 29 – Wages for Overtime Work
“Where any building worker is required to work on any day in excess of the number of hours constituting a normal working day, he shall be entitled to wages at the rate of twice his ordinary rate of wages.”
5. Shops And Commercial Establishments Act – State Specific
(a) The Karnataka Shops and Commercial Establishments Act, 1961
Section 8 – Extra Wages for Overtime Work
“Where an employee works in any establishment for more than nine hours on any day or for more than forty-eight hours in any week he shall in respect of such overtime work be entitled to wages at twice the rate of normal wages.”
(b) The Maharashtra Shops and Establishments (Regulation of Employment & Conditions of Service) Act, 2017
Section 15 – Wages for Overtime
“Where a worker in any establishment is required to work beyond nine hours a day or forty-eight hours a week, he shall be entitled, in respect of the overtime work, wages at the rate of twice his ordinary rate of wages. The total number of overtime
hours shall not exceed one hundred and twenty-five hours in a period of three months.”
Calculation of Overtime Wages / Payment
The Indian Labor Laws are still loosely defined when it comes to Overtime Wages / Payment. It has been noticed that a majority of the Indian Working Sectors calculate Overtime Wages / Payments on the “Basic Salary”. However, as per multiple labour laws, Overtime Wages should be calculated on the “Gross” salary.
TeamLease Opinion
It is necessary for all employers to be educated on all the labour laws applicable to them. What most of the Acts prescribe on Overtime Payment, is twice the ordinary rate of wages. It is so because Wage constitutes all remunerations earned by an Employee (Gross Salary). It is not limited to the employee’s basic salary. It’s surprising that the majority of the industry is calculating Overtime Wages only on the Basic salary, wherein it is not the right practice, as the same has nowhere been stipulated under any of the labour laws.
Written by: TeamLease HRtech, Digitalising Employee Experience
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