Quick answer
Overtime pay = overtime hours × 2 × (monthly basic + DA ÷ working days ÷ hours per day). A factory worker earns overtime for work beyond 9 hours a day or 48 hours a week, paid at twice the ordinary rate of wages.
The rule: twice the ordinary rate
Under Section 59 of the Factories Act, 1948, a worker who works more than 9 hours in a day or more than 48 hours in a week must be paid for the extra time at twice the ordinary rate of wages. India’s new labour codes, which bring the Factories Act and other laws together, keep the same “twice the normal rate” principle.
What counts as “ordinary rate of wages”
- Included: basic wages plus the allowances the worker is entitled to, such as dearness allowance (DA).
- Not included: bonus, and overtime pay itself.
The formula, step by step
- Hourly rate = (monthly basic + DA) ÷ working days in the month ÷ normal hours per day
- Overtime rate = hourly rate × 2
- Overtime pay = overtime rate × overtime hours worked
Worked example
Ravi is a machine operator. His basic + DA is ₹15,600 a month. His factory works 26 days a month, 8 hours a day, and he did 11 hours of overtime this month.
| Hourly rate | ₹15,600 ÷ 26 ÷ 8 | ₹75 |
|---|---|---|
| Overtime rate | ₹75 × 2 | ₹150 |
| Overtime pay | ₹150 × 11 hours | ₹1,650 |
Common mistakes
- Counting only daily overtime and missing time beyond 48 hours in the week.
- Including bonus in the hourly rate.
- Totalling overtime by hand from registers at month end, which is where errors creep in.
- Forgetting that the total overtime allowed in a quarter is capped, and that some states have changed the cap.
Let the software do it
In Mera Udyog, supervisors mark attendance by shift, overtime hours are recorded every day, and salary is calculated with overtime and approved leave already included. See attendance & payroll software.
This guide is general information, not legal advice. Labour rules differ by state and change over time, so confirm the details for your business with your CA or labour consultant.