Overtime & Working hours at Workplace: Legal implications and potential consequences

Employees often have to work beyond their regular working hours to increase productivity and achieve the company’s targets. It is crucial to understand the implications and potential consequences associated with overtime.

What are the normal working hours & Overtime regulations?

The?employment laws in India?state that any employee who works more than the established working hours is eligible for?an overtime remuneration for the period worked beyond mandatory working hours, i.e.,?8-9 working hours per day which equals a total of 48-50 hours a week.

There are numerous overtime rules and procedures in India stipulating different periods of?working hours under the labor law.

Factories Act, 1948

?As per Section -59 every adult (a person who has completed 18 years of age) cannot work for more than 48 hours in a week and not more than 9 hours in a day.

According to Section 51 of the Act, the spread over should not exceed 10.5 hours.

Overtime rules under the Factories Act, 1948 also specifies the?punishment in case an employer violates these provisions.

Minimum Wages Act, 1948

Section 14 “When the minimum wages of an employee are fixed for a particular period of time and the employee works beyond that period, then the employee has to be paid overtime wages for the extra time.”

Rules 20 to 25 specifies about the working hours that the number of work hours in a day should not exceed 9 hours for an adult.

Shops and Establishments Acts (SEA)

Every state in India has its own?SEA which also lays down?overtime rules?and procedures?for workmen employed in different institutions. The SEA is applicable to all?managerial and non-managerial positions, in every Indian shop and establishment.

Apart from the scheduled working hours at the businesses or establishments, employees are paid for overtime hours at a rate set by the SEA applicable to the State or UT. The duration of overtime is double the regular working hours in several states. Basic pay plus allowances is generally used to establish the employee overtime rate (not including any bonus).

The ingredients that must be present in order to be satisfied are as follows (may vary state wise).

• Daily working hours may range from 8-10 hours
• Weekly working hours cannot exceed 48 hours
• Overtime may range from 10-11 hours on a daily basis (1 to 3 hours)
• No continuous (break-free) work for more than 5 hours in one go
• Weekly limit of 50-60 hours
• Quarterly limit of 50-150 hours
• Spread over limit of 10-14 hours.

Contract Labour (Regulation & Abolition) Act, 1970

As per Rule 79 of the Act, it is compulsory for every contractor to maintain a Register of Overtime in Form XXIII which will contain all details relating to overtime calculation, hours of extra work, name of employee, etc.

Calculation of overtime

The regulations governing overtime payment guidelines that are referenced in various statutes make it clear that the type of work and location (State or Union territory) play a significant effect in how much overtime is paid.?For instance, the overtime payment rules in Maharashtra may not be similar to that of Uttar Pradesh. However, on an average and for those industries governed by the central laws, the following overtime calculation formula in India may apply:

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Hourly overtime wage = 2 x (Basic Pay + DA) / No of days in month x Max working hours in a day

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As per the overtime payment rules in India, it is calculated on basic salary including dearness or any other allowance but does not include any bonus or incentive while calculating overtime. In any case, the overtime payment rules do not regard the gross salary. But if there is no statutory obligation and the employer wishes to reward the hard-working employees voluntarily, overtime payment rules in India do not restrict the same.

Women and work hours

Provisions relating to work time of women under the law:

Section 66 of the Factories Act, 1948 imposes restriction on employment of women to work between 7.00 pm to 6.00 am. However, the Chief Inspector is empowered to grant relaxation, but in that case, women are not permitted to work between 10.00 pm to 5.00 am.

Work breaks

As per the provisions of the Factories Act, 1948 a rest interval of at least half an hour should be provided, in such a way that no period of work shall exceed 5-1/2 hours.?

According to Minimum Wages Act, the working day of an adult worker shall be so arranged that inclusive of the interval of rest it shall not exceed 12 hours on any day.

In the private sector, the working hours and timings?are stipulated by the employer in the company’s?HR policies, drafted in accordance with the overtime rules and procedures in India. The overtime work must be voluntarily taken up by the employee and not forced through an involuntarily or fraudulently signed agreement.

With an increasing number of MNCs in India, the working hours in an MNC in India are extended to night shifts as well, where employees have to work in accordance with the working hours of the country in which the parent company is located. However, there are no specific laws that deal with night shifts in India.

In the white-collar sector and management level employment, employees rarely raise demand for overtime payment, even though as per Indian employment laws, they are legally entitled to remuneration.