Over time rate - General Trend observed is OT is paid on Basic +DA

Dear HR Colleagues,

As per Section 59 (2) of the Factories Act, 1948, overtime should be paid as per "Ordinary Rate of Wages " which inclues Basic + da+ allowances.

But General Trend observed is OT is paid on Basic +DA.

Would like to have your Opinion on the same.

regards
Sanjay Neve

Dear Sanjay,
We should always try to adhere to the Act & Rules applicable to our unit. In case of litigation who will save you ?

R N KHOLA

Factories Act 1948 specifies that in respect of overtime work, the workman shall be entitled to wages at the rate of twice his ordinary rate of wages. Now, what is the Ordinary Rate of Wages? Undoubtedly Basic Pay and DA are included and accordingly is the rate decided in a majority of establishments. What allowances are included and what are excluded have to be examined on case to case basis, looking to the facts and circumstances regarding them. It can be said in general that all payments made every month as a fixed sum could be said to be included, whatever amount is paid in variation or is a reimbursement is excluded.