Overtime Calculator: Know How to Calculate Your Pay in India
Table of Contents
Overtime Calculator
Example of Overtime Calculation
- Basic Monthly Salary = ₹85,000
- Dearness Allowance (DA) = ₹5,000
- Rent Allowance (RA) = ₹3,000
- Total Number of Working Days in a Month = 30 Days
- Maximum Working Hours in a Day = 8 Hours
- Overtime Hours Worked = 5 Hours
- Overtime Multiplier = 2
Overtime = Overtime Multiplier * [(Basic Monthly Salary + DA + RA) / (Total Number of Working Days in a Month * Maximum Working Hours in a Day)] * Overtime Hours Worked
= 2 * [(85,000 + 5,000 + 3,000) / (30 * 8)] * 5
= 2 * [93,000 / 240] * 5
= 2 * 387.5 * 5
= ₹3,875
Accurate overtime calculation is necessary from a compliance perspective. In fact, employers can be charged up to ₹50000 under the code on wages. Overtime means any work beyond the legal schedule. In this guide, we explain overtime rules, the step-by-step formula with an example, and why accuracy matters, along with how automated overtime calculators help reduce errors and improve compliance.
Key Takeaways
- Overtime pay in India is mandatory at twice the ordinary hourly rate for hours beyond 8 daily or 48 weekly limits, as per Code on Wages 2019 (Section 14) and OSH Code 2020 (Section 25).
- Formula: Overtime Pay = (Monthly Wage ÷ (26 × 8)) × 2 × Overtime Hours; e.g., ₹30,000 salary yields ₹144.23/hour, so 10 OT hours = ₹2,884.60.
- Automated calculators ensure compliance, eliminate penalties (up to ₹50,000), save time, reduce disputes, and integrate with payroll for audit-ready records.
- Key factors: regular hourly rate, total OT hours, special days, state caps (e.g., 125 quarterly max), and exclusions from PF/bonus bases.
- Usage steps: input basic info (wage, OT type), calculate, review results, save/share reports for transparency.
Overtime Calculation
When an employee works beyond their regular 48-hour week, they earn overtime pay, calculated at twice the ordinary hourly rate. For example, if your monthly salary is ₹20,000 and you work 50 hours in a week, the extra 2 hours qualify as overtime. At twice the hourly rate, this adds ₹192 to your pay, making the total ₹20,192 for the month. Overtime rules can differ slightly across states, but the new Labour Codes set a uniform baseline for working hours and overtime payments.
Overtime Calculation Rules
The Code On Wages 2019, and the Occupational Safety, Health and Working Conditions code, 2020 list the provisions related to overtime. There are mainly five provisions related to overtime Calculation including:
- Section 14 of the Code on Wages, 2019 mandates that every worker must be paid overtime at not less than twice the normal rate of wages for hours worked beyond the prescribed daily or weekly limits.
- Section 25 of the OSH Code, 2020 sets the maximum working hours at 48 hours per week and 8 hours per day, which triggers the payment of overtime.
- The OSH Code, 2020 also requires that entitlement to overtime wages must be granted, and employers must maintain proper records of extra hours worked (Section 50).
- Section 2(y) (Definition of Wages) of the Code on Wages, 2019 clarifies that overtime wages are generally excluded from the wage base used for calculating PF and other statutory entitlements.
- The power to notify a maximum limit for overtime hours, which is suggested in the draft model rules to be 125 hours quarterly, is provided under Section 25(4) of the OSH Code, 2020.
Overtime Calculation Formula
Overtime Pay = Ordinary Hourly Rate × 2 × Overtime Hours Worked
To calculate the ordinary hourly rate, employers use the statutorily mandated period of 8 hours worked.
- Monthly Basis: Ordinary Hourly Rate = Monthly Wage ÷ (26 days × 8 hours)
- Daily Basis: Ordinary Hourly Rate = Daily Wage ÷ 8 hours
- Hourly Basis: Ordinary Hourly Rate = Statutory Wage for the Period ÷ 8 hours.
Let’s understand this better with an example.
Priya works a standard schedule and earns a statutory monthly wage of ₹30,000. When her weekly hours crossed the 48-hour limit, the extra time qualified as overtime payable at twice her ordinary hourly rate.
Ordinary Hourly Rate = 30,000 ÷ (26 × 8) = ₹144.23
Overtime Pay for 10 extra hours = 144.23 × 2 × 10 = ₹2,884.60
Her total monthly earnings including overtime = ₹32,884.60
How to Use the Overtime Calculator?
It works on collecting some primary data. The users must provide the data, and several steps are involved in this calculation process. Here, we mentioned the steps involved in using these calculators.
Provide Basic Information
To calculate your overtime pay, you have to gather some basic required information for the tool you chose. After getting the information, you are supposed to put it in the necessary section.
Overtime Type
The employer pays overtime depending on whether it’s daily, weekly, or monthly. So, after entering all necessary basic information, users must choose their OT type. In some tools, you need to pick your overtime type first, and then provide your basic information.
Overtime and Pay Calculations
After inputting all the essential requirements for the overtime pay calculation, you have to click the calculation button. Then, the calculator starts to generate the results and provide them within a short period of time.
Results
Once it successfully calculates the required overtime hours, the user can get their result. They can review the total hours of overtime that an employee served during a certain period of time and also the corresponding compensative payment that an employee is eligible to receive.
Save and Share Reports
The result reports and the series of records of the overtime the employee serves can be saved, and the user can share them if required. This feature enables the user to get the record and the reports at any time for any period. The employees can also track their compensative payment for the overtime served by them.
Why do Indian Companies Need an Automated Overtime Calculator?
Indian companies increasingly rely on automated overtime calculators because they help avoid errors, support compliance with the new labour laws, and ensure employees are compensated correctly. A well-designed tool syncs attendance, applies statutory rules, and keeps records inspection-ready without adding complexity to payroll teams.
- Eliminates Penalties: Prevents underpayment or delayed OT by automatically applying double-rate rules under the new labour codes.
- Saves Time: Replaces repeated manual entries with instant calculations once attendance is approved.
- Reduces Disputes: Offers clear, traceable OT hour records that employees and managers can verify.
- Creates Audit-Ready Reports: Maintains organised OT logs that can be downloaded for inspections.
- Integrates with Payroll Systems: Pushes approved OT hours directly into payroll without extra steps.
- Improves Compliance: Reflects updated legal standards on working hours and overtime as the new labour laws evolve.
Factors Involved in Overtime Calculations
Overtime calculations depend on multiple inputs that determine how much an employee should be paid for extra hours worked. These factors ensure accuracy, prevent payroll disputes, and keep payroll aligned with statutory requirements.
- Regular Pay Per Hour: The employee’s hourly wage derived from daily or monthly statutory wages.
- Overtime Pay Per Hour: The overtime rate applied as per applicable labour laws, typically double the ordinary hourly rate.
- Total Overtime Worked: The number of extra hours recorded daily, weekly, or monthly in line with company payroll cycles.
- Working on Special Days: Additional compensation when employees work on weekly offs or public holidays.
- Allowances and Variable Pay: Clarifies which components form part of statutory “wages” when arriving at OT calculations.
- Rounding Rules: Specifies whether OT minutes are rounded up, down, or to the nearest block.
- Employee Exemption Status: Identifies employees who are not eligible for overtime under certain state or sectoral rules.
- State Caps: Applies state-specific limits on maximum daily or weekly working hours before overtime begins.
Conclusion
The overtime calculator is a useful tool that simplifies overtime calculations, saving time and reducing errors. It ensures compliance with labor laws and promotes transparency between employees and employers. Using software with built-in overtime calculators can enhance this process, making it easier to maintain records and access them for review.
Frequently Asked Questions
How to Calculate Hourly Rate?
Divide the wage components that qualify as “wages” under the Code on Wages by the total monthly working hours. The result is the ordinary hourly rate, which becomes the base for calculating overtime at twice the rate.
What’s the Difference between Factories Act and My State’s Shops & Establishments Act?
The Factories Act is a Central law focused on manufacturing units with uniform rules on working hours and overtime. State Shops & Establishments Acts apply to commercial and service workplaces and differ by state in working-hour limits, overtime rules, and exemptions.
What are the Penalties for Not Paying Overtime Correctly?
Penalties are prescribed under the Wages Code and other applicable Codes, which include fines, compounding options, and enforcement actions by inspectors, depending on the specific violation and the rules notified by the Centre or state.
Can I Give Compensatory off (Comp Off) Instead of Overtime Pay?
The OSH Code allows compensatory holidays for work done on weekly holidays or designated days, but the Code on Wages separately requires overtime wages at twice the ordinary rate. Whether comp-off can substitute depends on the exact rule notified.
How do I Handle Overtime for Female Workers?
Female employees can work overtime subject to consent and prescribed safety conditions, especially for night hours, as outlined in the OSH Code and relevant state notifications. Conditions may vary across states.
What’s the Maximum Overtime a Single Employee Can Work per Quarter/Year?
Model draft rules propose a 125-hour overtime cap per quarter, while some states reference higher limits. The applicable cap depends entirely on the specific central or state rules that have been officially notified.
Does Overtime Pay Affect Annual Bonus, Performance Pay, or PF Calculations?
Overtime wages are generally excluded from calculations of statutory bonus and certain other payments. The Code on Wages definition of “wages” determines which pay elements are included or excluded for PF, bonus, and similar computations.
Do I Need to Track Overtime in Writing, or are Digital Timesheets Enough?
Both are acceptable as long as records are accurate, auditable, and maintained in the format prescribed. Digital systems are valid if they clearly capture hours, approvals, and link to wage records and payslips.
Are Managers and Supervisors Eligible for Overtime Pay?
Eligibility depends on how the role is classified under the Code. While the Wage Code covers most employees, some roles with managerial or supervisory functions may fall outside overtime provisions depending on definitions in the notified rules.
What if My Employee Works Irregular Shifts or Rotating Schedules? How do I Calculate Overtime?
Use the daily and weekly hour limits under the Codes to determine excess hours. Any hours beyond those limits qualify as overtime, calculated at twice the ordinary hourly rate, with shift-based spread-over and transition rules applied where relevant.
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