Dear seniors, I have seen that most of the company in maharashtra pay ot @ double of basic+da and no any other allowance. Is it legally correct to do so? Please advise. Thanks.
From India, Pune
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470From India, Pune
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That is the right (legal) way to calculate OT. It should be double of Basic+DA on hourly basis. No other allowances or statutory benefits are applicable on OT. regards, Kamal
From India, Pune
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From India, Pune
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Under the Factories Act, it is very clearly stated that overtime is to be paid at double the Ordinary Wages (Sec 59).
Ordinary Wages are basically gross wages as they include all allowances other than overtime.
Anyone paying double of basic + DA is in violation of the act and can be asked to pay the balance upon a complaint. It's a different matter that most companies are doing that, and the government is ignoring it. In case of a complaint, however, there is little chance of the court agreeing with the "General Practice" when there is a specific provision in the act (which again is very clear).
You do it at your own risk.
The claim for differential back wages can go back up to 3 years (which is due to limitation/time barring and also because records under labor laws are required to be kept for 3 years). However, in case of a complaint, especially where it is proved that the employer was aware and deliberately suppressed the complaint or used delay tactics, the court may go beyond the 3 years to decide the quantum of back wages, interest, and penalty.
From India, Mumbai
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Ordinary Wages are basically gross wages as they include all allowances other than overtime.
Anyone paying double of basic + DA is in violation of the act and can be asked to pay the balance upon a complaint. It's a different matter that most companies are doing that, and the government is ignoring it. In case of a complaint, however, there is little chance of the court agreeing with the "General Practice" when there is a specific provision in the act (which again is very clear).
You do it at your own risk.
The claim for differential back wages can go back up to 3 years (which is due to limitation/time barring and also because records under labor laws are required to be kept for 3 years). However, in case of a complaint, especially where it is proved that the employer was aware and deliberately suppressed the complaint or used delay tactics, the court may go beyond the 3 years to decide the quantum of back wages, interest, and penalty.
From India, Mumbai
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Dear Prashant ji,
I agree with Saswata ji. Please read section 59(2) which states that the ordinary rate of wages means the basic pay plus such allowances, including the cash equivalent of... but does not include bonus and wages for overtime. Additionally, it was ruled in Chief General Manager, Telecom Factory Vs. H. R. Thakur & Ors. 1998 I CLR 1260 (Mumbai) that House Rent Allowance (HRA) is to be taken into consideration when computing overtime wages.
From India, Mumbai
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I agree with Saswata ji. Please read section 59(2) which states that the ordinary rate of wages means the basic pay plus such allowances, including the cash equivalent of... but does not include bonus and wages for overtime. Additionally, it was ruled in Chief General Manager, Telecom Factory Vs. H. R. Thakur & Ors. 1998 I CLR 1260 (Mumbai) that House Rent Allowance (HRA) is to be taken into consideration when computing overtime wages.
From India, Mumbai
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Factories (Maharashtra Amendment) Act 2015.pdf