Overtime Calculation Under the New Labour Codes (With Examples)

To calculate overtime under the labour codes, find the ordinary hourly rate of wages – monthly wages divided by working days and normal daily hours – and pay twice that rate for every hour beyond 8 a day or 48 a week. For a worker on ₹13,800 a month, that's about ₹66 an hour and ₹133 an hour for overtime.

The Occupational Safety, Health and Working Conditions Code, 2020 (OSH Code) and the Code on Wages, 2019 apply from 21 November 2025. Below: the hours limits, what counts as wages, worked examples, rounding, the quarterly cap and the records to keep.

Working hours and when overtime starts

• Normal hours: 8 a day and 48 a week, with rest intervals.
• Overtime is work beyond either limit – whichever gives the worker more.
• Work on a weekly off or holiday: if the worker has already worked the week's normal hours, every hour that day is overtime.
• Overtime needs the worker's consent; record it.

The ordinary rate of wages

Start from wages under the Code on Wages: basic pay, dearness allowance and retaining allowance, plus any excess of other allowances over 50% of total pay. Divide by the working days you use – 26 is common – and by 8 hours.

Example: basic + DA ₹13,800 and allowances ₹2,600. The allowances are below half of ₹16,400, so wages stay ₹13,800. Daily rate ₹13,800 ÷ 26 = ₹530.77; hourly ₹66.35; overtime rate ₹132.69 an hour.

Worked examples

1. Weekday: Vikas works 11 hours. Overtime = 11 − 8 = 3 hours. At an overtime rate of ₹134.62, pay is ₹404.
2. Part hours: Manoj works 9 hours 15 minutes. With the rounding rule below, 15 minutes counts as half an hour: 1.5 hours × ₹132.69 = ₹199.
3. Sunday (weekly off): Ramesh works 8.5 hours on a Sunday after a full week. All 8.5 hours are overtime: 8.5 × ₹120.19 = ₹1,022.

Rounding of part hours

The Central rules count 15 to 30 minutes of extra time as half an hour and more than 30 minutes as a full hour; under 15 minutes is ignored. Apply the rule your State notifies, and state it in your policy so supervisors record time the same way.

The quarterly limit

The Central rules allow up to 144 hours of overtime in a quarter; States may set different limits. Track each employee's hours by quarter – April–June, July–September and so on – and stop scheduling overtime before the cap. A maintenance technician working 14-hour days through a busy month can cross it within a few weeks.

Common mistakes

• Using gross salary as the base. HRA, conveyance and other excluded allowances don't count unless they exceed half of total pay, so the rate is usually lower than gross ÷ 208.
• Paying a flat amount per hour. A fixed ₹100 an hour for everyone breaks the twice-the-ordinary-rate rule for anyone whose ordinary hourly rate is above ₹50.
• Ignoring the weekly limit. Seven days of 7.5 hours is 52.5 hours: no single day is over 8, but the week is 4.5 hours over 48.
• No record of consent. Without it, overtime is hard to defend in an inspection or a dispute.
• Overtime outside payroll. Paying overtime in cash off the books understates wages for PF, ESI and bonus, and leaves no audit trail.

Overtime, PF and ESI

Overtime is excluded from wages under the Code on Wages, so it doesn't add to PF. It is, however, part of wages for ESI, so ESI contributions apply to overtime pay for covered employees. Show overtime as a separate line in the salary sheet so both are handled correctly.

Records to keep

Our free Leave Encashment & Overtime Calculator keeps this register for up to 1,000 entries, works out the hourly and overtime rates, applies the rounding and weekly-off rules, summarises hours and pay by month and flags anyone over the quarterly limit. The same file calculates annual leave and encashment at year end or on exit. The Pro edition adds a monthly overtime slip per employee. It's also in the HR & Payroll Kit with the salary sheet and attendance tracker.

• A register of overtime: date, employee, hours worked, overtime hours, rate and amount.
• The worker's consent for overtime.
• Overtime paid with the month's wages, shown separately on the payslip.
• Quarterly totals against the limit.