BUSINESS Compliances LAWS & SCHEMES Employment Laws

Overtime Pay Calculation & Working Hour Rules

August 26, 2019

The government has put certain laws in place to ensure that the health of a worker is not comprised due to overtime working hours. If a worker were to work continuously, it would not only hamper his mental and physical health but also increase the risk of accidents at his workplace. Since the worker would be over-worked, his concentration and focus would deter and he might cause an accident at his factory. This is why the government has formed the Ordinary Working Hours. In this article, we will look at the working hours ascribed to various departments and overtime pay calculation.

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Acts Governing Working Hours & Overtime Pay

According the establishment, different ordinary working hours are assigned. Workers at factories get governed under the Factories Act, 1948, which is now set to be replaced by the Code on Occupational Safety, Health and Working Conditions. Workers working under shop and establishments are governed under the Shop & Establishment Act. Both these acts are made by the Central Government, with some power to change resting with the State Governments.

What is Working Hours?

Working Hours is the time period where the employee is at the disposal of the employer and ready to do all work the employers assigns to him. This excludes time for break, lunch and any rest. The working hours prescribed as per the rules are called Ordinary Working Hours. Meanwhile, if the employee works for more than the prescribed work hours, then it is called overtime hours.

Whats is Spreadover?

Spreadover is the total time duration from the start of the working hours to the end. Unlike working hours, spreadover includes all the time spend on breaks, lunch and rest. For instance, if you punch in the office at 10 am and punch out at 7 pm, this whole 9 hours is your spreadover. If you have a lunch break of 1 hour in between, then your working hours is 8 hours.

What are the different timelines?

A week means a period of 7 days starting from Saturday midnight. Quarter means the period three months starting from January 1st, April 1st, July 1st and October 1st. Thus, this stands for January to March, April to June, July and September, and October to December.

What are the maximum working hours?

Under the Factories Act, it states that ordinary working hours can be a maximum of 9 in any given day and 48 in a given week. The maximum allowable spreadover is 10.5 hours. While, there is also a recommendation of a minimum interval of half hour after every 5 hours of work.

There is also a limit to the allowable overtime period for any employee. In any given day, the maximum working hours including overtime cannot exceed 10. Similarly, in a week, the maximum working hours including overtime cannot exceed 60. The spreadover for this is restricted to 12 hours. In a quarter, the maximum overtime working hours cannot exceed 100. But in some cases, there may be a lax to exceed it to 125 hours.

These limits may not be applicable to all employees such as miners, journalists, sales and promotion people, motor transport workers and worker below 18 years. Rules for these workers are given specifically under Chapter 7 of the Code on Occupational Safety, Health and Working Conditions.

What is the Shop & Establishment Act?

The Shop & Establishment Act, is the only act to not be included in any of the four labour codes. The State Governments gets more power under this Act, hence the limits are a little different.

Under this Act, the ordinary working hours for any given day, range between 8 to 10 hours in different states. But the ordinary working hours for any given week cannot exceed 48 hours. In any given day, the maximum working hours including overtime can range between 10 to 11 hours. In any given week, the maximum working hours including overtime can range from 50 to 60 hours. The quarterly limit for Overtime ranges from 50 to 150 hours. Most states prescribe resting for 1 hour after every 5 hours of work. This also varies in different states. The allowable spreadover in any given day can range from 10 to 14 hours.