Overtime Payment Falls On New Salary Structure

Hello there,

The staff has been doing overtime in December 2007, which will be paid in January 2008. However, there is a new salary structure for January 2008. Should I follow the basic salary from January 2008 or December 2007? Please advise.

Thank you

Consider the period they were on over time and pay accordingly as applicable in that month.

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Consider the period they were on over time and pay accordingly as applicable in that month.

Overtime wages are calculated based on the wages prevailing at the time of overtime. However, if a new salary is introduced with retrospective effect, for example, with effect from December 2007, then an employee is eligible for back wages. This should include the OT wages. Therefore, in such cases, OT shall also be calculated at the revised rates. On the other hand, if the revision takes effect from January 2008 only, then OT for December 2007 will be calculated at the pre-revised wage rate only.

Please remember that this rule applies only to OT. For leave encashment, payment of Gratuity, and Retrenchment benefits, the rate applicable at the time of such leave encashment or payment of gratuity/compensation will be taken as the base.

Regards,
Madhu.T.K

Dear Mr. Madhu T. K.,

Could you please provide a little more detail on the calculation of OT payment and the basis for it? Is it calculated based on the basic salary or the gross salary, in line with statutory norms and industrial practices?

Pradeep