New Delhi. The Central Government has today announced the implementation of major labor reforms in the country. This is being considered a big step of the government towards labor reform. The government implemented all four labor codes from today. These reforms were being demanded by the industry and investors for a long time. The special features of these labor codes include the guarantee of timely minimum wages for all workers. Along with this, guarantee of appointment letter for youth, guarantee of equal pay and respect for women, guarantee of social security for 40 crore workers, guarantee of gratuity after one year of service for fixed-term employees, guarantee of free annual health check-up for workers above 40 years of age are included. The most important thing is that the government has guaranteed double wages for overtime. Whereas, 100% health security has been guaranteed for workers in hazardous sectors and social justice has been guaranteed for workers as per international standards.
What does the overtime law say?
Overtime rules in India are mainly decided under the Factories Act 1948, Minimum Wages Act, and State Shops & Establishment Acts. According to these laws, any employee can be required to do additional work beyond the daily fixed shift only if the company follows the legal guidelines for the same. Normal working hours in factories are 9 hours per day or 48 hours per week. If there is more work than this, it is considered overtime. The law is very clear regarding overtime – if the company makes an employee work more than the prescribed limit, then it will have to pay it at double the regular hourly wage. That means, if the hourly wage of an employee is Rs 100, then for overtime he will get Rs 200 per hour. The law also guarantees that overtime must be completely voluntary. Additional work cannot be done without the consent of the employee. It is also clearly written in the Shops and Establishment Acts of many states that the company has to provide special security arrangements for a female employee to work overtime at night.
2 hours extra work a day – how much should you get paid?
If an employee works 2 extra hours a day, his overtime is calculated by dividing his monthly salary by 26 days and then converting it into per hour. For example, if an employee’s monthly salary is Rs 26,000, his hourly wage will be around Rs 125. According to the law, the overtime rate will be double this, i.e. Rs 250 per hour. In this way, for 2 hours of overtime every day, the employee should get Rs 500 per day. If he works an extra two hours for 20 days in a month, the overtime amount reaches Rs 10,000. Many times companies give compensatory off or in-lieu off to employees, but this is valid only if the employee agrees. The law also says that overtime must be recorded in a registered register, so that transparency is maintained in the payment of workers. An important thing here is that the limit on overtime is also fixed. According to the Factories Act, an employee cannot work more than 144 hours of overtime in any quarter. Many states vary this limit slightly, but there is a maximum limit on overtime everywhere.
Do overtime rules apply to all employees?
The provision of overtime does not apply equally to every employee. Some categories—such as managerial staff, supervisory roles, or salaried employees in senior positions—may be exempt from overtime under the rules of some states. In such cases, companies include extra hours of work in the CTC itself. However, overtime is mandatorily payable to employees working in technical, operational, production or manual labor sectors. It has also been ensured that no company can force overtime on its employees. Overtime rules are more strict for female employees. Before working overtime at night, the company has to arrange for security, transportation and a security officer. Many states have also added special provisions for women on overtime during night, so that their safety is ensured. Employees should also know that statutory deductions like PF and ESIC are not applicable on overtime pay. This is completely additional income, which goes directly into the hands of the employee.
Responsibility of companies and rights of employees – where do most mistakes happen?
The ground reality is that lakhs of employees in India work overtime every day, but many do not get proper payment for it. Especially in small industries, retail sector, security services and hospitality, enforcement of overtime rules is often weak. In many places, employees are made to work for 10-12 hours, but the salary they get is the same which is fixed for 8 hours. According to the law, this is clearly illegal. Labor inspectors and factory departments constantly monitor such cases. Employees should also be aware of their rights and should not hesitate in demanding overtime payment from the company. Senior employees are advised to read their job letter, HR policy and copy of State Shops & Establishment Act carefully. Many companies also make their own overtime policies, but they cannot be above the law. If an employee feels that his overtime payment is being withheld, he can take the help of HR, Labor Office or online grievance redressal system. Many reforms regarding overtime are also proposed in the new labor codes of the government, the aim of which is to increase the safety and transparency of employees.
