Overtime pay: hours × the right rate
Derive the hourly rate from the monthly wage, apply the statutory double-rate (or your policy's multiple), and see what the hours are actually worth — per day and per month.
Your inputs
The overtime pay
The Factories Act / OSH-code framework pays covered workers overtime at twice the ordinary rate of wages, with quarterly hour caps: hours beyond the cap are a compliance flag, not just a cost. Verify your establishment's covered categories and applicable caps.
Getting the ordinary rate right
Most overtime disputes are really rate disputes: which wage feeds the hourly derivation, and which divisor converts a month to a day. The statutory 'ordinary rate' builds from wages including relevant allowances; establishments commonly derive it as monthly wage ÷ 26 ÷ daily hours for workers (the 26 mirrors the wage-day convention) or ÷ 30 for staff policies. Whichever basis your establishment uses, three disciplines keep it defensible: write the basis down, apply it identically to everyone in a category, and compute OT from captured hours (rostered or approved) rather than recollection. Hours that never entered a record become payments that can never be explained.
The capture side (punches, rosters, approval flows and the quarterly caps) is what PeopleDeck's attendance & leave runs, with approved hours flowing straight into the payslip's overtime line.
A worked example
A packing-line worker on ₹18,000 monthly (26-day basis, 8-hour days): ordinary hourly rate ₹86.54; at the statutory 2×, each OT hour pays ₹173.08. Fourteen festival-season OT hours add ₹2,423 to the month, and because the wage entered ESI's base, the contribution computes on the higher figure too. The same 14 hours on a wrongly used 30-day divisor would pay ₹2,100, a ₹323 underpayment that repeats every month it goes unnoticed, which is precisely why the divisor belongs in written policy.
Illustrative; your wage basis, divisor and covered-category status decide the real figure.
Frequently asked questions
What is the legal overtime rate in India?
Twice the ordinary rate of wages for workers covered by the Factories Act / OSH-code framework: the calculator defaults to 2× with the multiple editable for policies that differ where the statute permits.
How is the hourly rate derived from a monthly wage?
Monthly wage ÷ days divisor ÷ daily hours. The 26-day divisor mirrors the wage-day convention for workers; some staff policies use 30. The divisor belongs in written policy; it moves the rate by 15%.
Are there limits on overtime hours?
Yes: the framework caps overtime hours per quarter for covered workers, and hours beyond the cap are a compliance breach even when paid correctly. Tracking against the cap is part of what attendance systems do.
Does overtime pay attract PF and ESI?
Overtime enters ESI's contribution base when paid (without counting toward the coverage-exit test). For PF, overtime sits outside the basic+DA contribution base in the standard treatment.
What if my employer pays overtime at 1× or as 'comp-off only'?
For statute-covered workers, single-rate overtime undercuts the Act; comp-off arrangements have their own rules. Policy can exceed the statute, never undercut it, a question for your establishment's covered-category analysis.
Captured hours, computed pay.
Approved overtime becomes a payslip line automatically — PeopleDeck, per employee.
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