How to Calculate Overtime Pay in India
A complete legal and mathematical guide for Indian HR professionals.
Legal Framework for Overtime
In India, overtime is governed primarily by the Factories Act, 1948 and the various state-specific Shops and Establishments Acts. The general rule across these laws is that any work performed beyond 9 hours a day or 48 hours a week constitutes overtime.
The "Double Wages" Rule
Under Section 59 of the Factories Act, an employee who works overtime is entitled to wages at the rate of twice their ordinary rate of wages. This is a common standard adopted by many other sectors as well.
The Calculation Formula
To calculate overtime, you first need to determine the hourly rate of the employee's ordinary wages (Basic + DA).
Overtime Pay = (Hourly Rate x 2) x Total Overtime Hours
Compliance and Limits
Most states have a limit on the maximum number of overtime hours an employee can work in a quarter (usually 50–75 hours). Exceeding these limits without proper approvals can lead to penalties during labor inspections.
Automate Overtime with WorkoTime
Tracking overtime minutes manually is error-prone and often leads to disputes. WorkoTime's attendance engine automatically detects work beyond shift hours and calculates the overtime pay based on your company's policy and state laws. Employees get transparency, and HR gets accurate payroll in one click.