Can anyone suggest to me how we can calculate the overtime wages? What's the formula?

amritagupta33
Hi, Can anyone suggest to me how we can calculate the overtime wages? What's the formula?
Regards
Basant
dear member

Industrial employees are entitled to additional payment for work done

beyond the normal working hours. There are two sets of rules applicable for overtime payment viz. (i) Departmental Rules and (ii) The Factories Act.

For work beyond normal working hours and upto 9 hrs. a day or beyond 44.75 hrs upto 48 hrs in a week, overtime is paid under departmental rules which is known as DOT.

For work done beyond 9 hrs. a day or 48 hrs a week, payment is admissible at twice the rate of pay plus all allowances under the Factories Act (often loosely termed as OT Bonus).

OVER TIME PAYMENTS UNDER DEPARTMENTAL RULES (DOT)

In the case of Day Workers, the overtime is paid at the rate of Basic Pay + Dearness Allowances + City Compensatory Allowance + Personal Pay + Special Pay +Pension to the extent as applicable, divided by 200 for each hour of overtime worked.

The hourly rate is the same for the work done both in Day & Night Shift.

In the case of Piece Workers, again there are two sets of rules for DOT.

It is calculated @ Basic Pay (alone)/200 per hour in the day shift. For working in the night shift, an additional element known as Night Shift Bonus is also added.

This is calculated

for half an hour for each hour of overtime worked under departmental rules @ (Basic Pay + Dearness Allowances + City Compensatory Allowance)/200.

OVER TIME PAYMENTS UNDER THE FACTORIES ACT, 1948

For work done, beyond 9 hrs. a day or 48 hrs a week, there are two sets of rules –one for the Day Worker and the other for the Piece Worker.

Day Worker: Hourly rate of payment which are applicable equally in the day shift as well in the night shift is calculated at the rate = twice the pay & allowances/200.

Piece Worker: Hourly rate of payment in the day shift is calculated at the rate = twice the pay & allowances/200. In the night shift, the same becomes = (twice the pay + pay/4 +

allowances)/200.

Hope it will be helpful.

regard

basant
anil kaushik
Hi amrita,
it is to be calculated at double the rate of ordinary rate of wages drawn by him .
for details, pl. read sec. 59 of factories act.
complete procedure is provided. if still not clear , pl. ask again.
regds
anil kaushik
Ganeshhr
Hi,Overtime will be calculated as folows:Gross wages / 26 / 8 X 2 X number of extra hours worked.RegardsGanesh
Madhu.T.K
Dear Basant,
I didn't get your dividing the rate by 200. I believe that under Factories Act, the OT is calculated at double the hourly average rate of wages. Hourly rate is the daily wages divided by 8 and daily rate is the monthly wages (Basic + DA only) divided by 30 or 26 as the case mat be. As ganeshhr put in it need not neccessarily be 26 days since in Factories Act there seems to be no mention about it like Gratuity Act where the daily rate is certainly calculated by dividing the monthly salary by 26 and not by 30 irrespective of whether the employee is monthly rated or daily rated. But under other labour enactments daily rate of wages means monthly wages divided by 30 in case of monthy rated workers and 26 in case of daily rated workers.
Regards,
Madhu.T.K
Ganeshhr
Hi Madhu,For calculating overtime compensation the denominator factor should always be 26 to arrive the daily rate of wage of worker.As per the notification issued by the concerned state government labour department with respect to minimum wages for scheduled employment will state that to arrive daily rate of wages monthly wages shall be divided by 26.Hence for OT calculation, to arrive at daily rate of wages (or) ordinary rate of wages the gross wages should be divided by 26.RegardsGanesh
vaishaali
Dear One Thanks for the valuable informations well would you please provide me the OT Calculations for a company which has Five days week and provide me the request template for OT work.
Pradeep D.
malikjs
dear
it is to be always divided by 26 not by 30 as mentined bysomeone earlier.why we are dividing by30/26,because to get one day salary and oneday salary you will get by dividing 26 as per minimum wages act.
j s malik
S Rajasekaran
Dear Gupta,
U/s.59 of Factories Act, where a worker works in a factory for more than 9 hrs in any day or more than 48 hrs in any week, he shall in respect of OT work be entitled to wages at the rate of twice his ordinary rate of wages.
However, pls note in Factories Act there is no definition for wages. Then how to arrive or understand, ordinary rate of wages.
'ordinary rate of wages' means the basic wages plus such allowances, including the cash equivalent of the advantage accruing through the concessional sale to workers of foodgrains and other articles as the worker is for the time being entitled to. It does not include a bonus and wages for overtime work.
S Rajasekaran
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Anoop Sathyan
Dear Malik,
You have stated that for calculating per day wages we have to divide monthly salary by 26 instead of 30/31. Could you please mention the section in Minimum Wages Act for calculating one day salary.
Regards
Anoop Sathyan
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