Overtime Policy

The employee overtime payment policy outlines the compensation an employee receives for working more than regular working hours. Overtime pay is typically higher than the regular hourly rate ( around 1.5x ) to compensate employees for the additional time and effort put into their work.

In India, the overtime rules are governed by the Factories Act, of 1948, and the respective State Shops and Establishments Acts. 

According to these rules and regulations:

• Employees are generally not allowed to work more than 9 hours a day or 48 hours a week.
• Overtime should not exceed 50 hours in any quarter.
• Any work done in time of more than standard hours is considered overtime.

Overtime (OT) in India is usually calculated based on the following criteria:

Worked Hours: Calculate the total number of overtime hours worked by the employee.

Hourly Rate: Determine the regular hourly rate of the employee as per the working hours, salary, and working days. 

Overtime Rate: The overtime rate is usually 1.5X or twice the regular hourly rate. 

Overtime Pay Calculation: Multiply the overtime rate by the number of overtime hours worked to determine the overtime pay.

The maximum limit of overtime in India should not exceed 50 hours in any quarter. This means an employee should not work more than 50 hours of overtime in three months.

The formula for calculating overtime pay in India is straightforward:
Formula:
Overtime Pay=(Overtime Hours× Overtime Rate)