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Glossary

What is overtime pay?

What overtime pay is, how the ordinary hourly rate is worked out from monthly wages, and how overtime is added to the payslip.

Updated

In short

Overtime pay is extra wages for hours worked beyond normal hours, often at twice the ordinary rate. SimpleERP records check-in and check-out times but does not compute overtime; you add it as a payslip line.

Overtime pay is the extra wage an employer pays for hours worked beyond the normal working day or week. Under the Code on Wages 2019 and the Occupational Safety, Health and Working Conditions Code 2020, formerly the Factories Act, as notified, covered workers are paid twice their ordinary rate of wages for overtime, with limits on overtime hours per quarter. The ordinary hourly rate is usually monthly Basic and dearness allowance divided by working days and daily hours.

Overtime pay: a worked example

Muthu K, welder at Lakshmi Steel Furnitures, works 12 hours of overtime in October 2026 to finish an order of steel racks. His Basic is ₹13,000 for 26 days of 8 hours, and the business pays overtime at twice the ordinary rate.

StepWorkingAmount
Ordinary hourly rate₹13,000 ÷ 26 ÷ 8₹62.50
Overtime rate, twice ordinary₹62.50 × 2₹125
Overtime for 12 hours₹125 × 12₹1,500
Which components count in the ordinary rate, and the overtime limits, are as notified; check the current rules.

FAQ

Questions, answered

Is overtime always paid at double the rate?

Overtime is paid at double the ordinary rate of wages for workers covered by the labour codes, which replaced the Factories Act, and by many shops and establishments acts, as notified. Managers and some other staff may be outside those rules. Your employment terms can pay more, but not less than the law requires.

What counts as overtime hours?

Generally hours beyond 9 in a day or 48 in a week for factory workers, with similar limits under state shops acts. There are also caps on total overtime per quarter. Check the current rules for your state and type of business.

Does SimpleERP calculate overtime from check-in times?

SimpleERP does not calculate overtime pay from check-in times. Check-in and check-out give worked hours per day, shown in the attendance summary as average hours, but overtime pay is not computed. Total the extra hours, work out the amount and add it as an Other earning line on the payslip.

Is PF deducted on overtime pay?

Overtime is generally kept out of the wages PF is worked out on, so PF on Basic does not change. In SimpleERP, an Other earning line adds to gross pay without changing the PF line. Check the current rules with your CA.

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