Overtime pay in India: rules and how to calculate it
When is overtime payable, and at what rate? A practical guide to calculating OT correctly and keeping your business compliant.
Employees who work beyond their normal hours are usually entitled to overtime pay. Get the rate or the hours wrong and you either underpay staff or overspend — both are problems. Here’s how overtime works and how to calculate it.
When is overtime payable?
Overtime typically applies when an employee works beyond the standard working hours defined by law or their contract — commonly beyond 9 hours in a day or 48 hours in a week for covered workers. The exact rules depend on the applicable labour law and your establishment type.
The standard overtime rate
Under most Indian labour statutes, overtime is paid at twice the ordinary rate of wages — that is, 2× the normal hourly pay for each overtime hour.
How to calculate overtime pay
The calculation has three simple steps:
- Find the hourly rate:
Monthly wage ÷ total working hours in the month. - Count overtime hours: the hours worked beyond the standard limit.
- Apply the rate:
Overtime pay = overtime hours × hourly rate × 2.
Example
- Monthly wage: ₹26,000
- Working hours in month: 208
- Hourly rate: ₹125
- Overtime worked: 10 hours
- Overtime pay = 10 × ₹125 × 2 = ₹2,500
Why accurate hours matter
Overtime is only fair — and only compliant — if the hours are exact. Manual timesheets tend to round, guess, or miss OT entirely. Biometric attendance captures the precise in and out times overtime should be based on.
Automate overtime in payroll
Staff Payroll reads real attendance, identifies hours beyond the shift, applies your overtime rate automatically, and rolls the amount into the payslip — so OT is accurate, transparent, and effortless.