Overtime pay in India is the extra wage an employee earns for working beyond legally permitted daily or weekly hours. In most establishments, overtime wages are paid at double the ordinary rate of wages. An overtime calculator helps employees and employers compute this amount accurately using salary, working hours, and overtime hours.
Instead of estimating manually, you can calculate precise overtime earnings using this Overtime Calculator for India, built for Indian payroll structures.
What Is Overtime Pay?
Overtime refers to hours worked beyond the standard working schedule defined under labour laws. These limits typically apply on a daily and weekly basis. When employees exceed these thresholds with employer approval, they must receive overtime wages at a higher statutory rate.
Overtime provisions exist to ensure fair compensation, prevent exploitation, and regulate working hours across industries.
Legal Basis for Overtime in India
Overtime payment requirements arise primarily under:
- Factories Act – Applies to manufacturing establishments
- Shops & Establishments Acts – State-specific laws governing commercial establishments
- Wage-related labour codes – Define wage components and calculation principles
Although exact daily limits may differ by state or industry, the overtime rate is commonly 2× (double wages) of the ordinary rate. Employers must also maintain proper overtime records for compliance. Official guidance can be referred through the Ministry of Labour & Employment.
Standard Working Hour Limits
| Parameter | Common Standard |
|---|---|
| Daily working hours | 8–9 hours |
| Weekly working limit | 48 hours |
| Overtime eligibility | Beyond daily or weekly limits |
| Overtime wage rate | 2× ordinary rate of wages |
Exceeding these limits triggers overtime pay obligations, subject to state rules and industry-specific provisions.
How to Calculate Overtime Pay
Overtime calculation depends on identifying the ordinary hourly wage first.
Step 1: Calculate Ordinary Hourly Rate
Ordinary Monthly Wages ÷ Total Working Hours in the Month
Step 2: Apply Overtime Multiplier
Hourly Rate × Overtime Hours × Overtime Rate (usually 2)
Standard Overtime Formula
Overtime Pay = Hourly Rate × Overtime Hours × 2
This double-wage formula is widely applied across Indian establishments.
Practical Example of Overtime Calculation
| Detail | Value |
|---|---|
| Monthly Salary | ₹30,000 |
| Total Monthly Working Hours | 240 |
| Hourly Rate | ₹125 |
| Overtime Hours | 10 |
| Overtime Pay (2×) | ₹2,500 |
Here, 10 overtime hours generate ₹2,500 in additional wages.
What Counts as “Ordinary Rate of Wages”?
Overtime is not always calculated on total CTC. It is typically based on wage components defined as “ordinary wages,” which generally include:
- Basic pay
- Dearness allowance (if applicable)
- Retaining allowance (in certain industries)
Allowances such as bonuses, incentives, or reimbursements may not form part of overtime wage calculation depending on law and structure. Payroll professionals often verify this using salary tools like the Salary & Take-Home Calculator.
Common Overtime Calculation Mistakes
- Using gross salary instead of ordinary wages
- Ignoring state-specific working hour limits
- Incorrect monthly working hour assumptions
- Missing overtime record maintenance
- Applying wrong multipliers
These errors can lead to underpayment disputes or compliance penalties.
Why Use an Online Overtime Calculator?
Manual payroll calculations are error-prone, especially when dealing with multiple employees, changing hours, or complex salary structures.
- Instant and accurate calculations
- Clear earnings breakdown
- Reduces payroll processing time
- Improves compliance accuracy
- Helps employees verify correct pay
Who Should Use an Overtime Pay Calculator?
- Employees checking overtime wages
- HR and payroll professionals
- Factories and shift-based industries
- Small and medium businesses
- Compliance and labour consultants
Overtime vs Extra Shift vs Comp Off
Employees often confuse these concepts:
- Overtime: Paid at higher wage rate for extra hours
- Extra shift: Additional shift may be treated as overtime depending on limits
- Compensatory off: Leave granted instead of payment (allowed only under specific rules)
Payment cannot be replaced with leave unless permitted by applicable law.
Best Practices for Employees
- Maintain personal records of working hours
- Check payslips regularly
- Obtain written approval for overtime work
- Understand your company’s overtime policy
- Use calculators before payroll closure
Conclusion
Overtime pay is a statutory right designed to compensate employees for extended working hours. Correct calculation depends on identifying the right wage base, correct hourly rate, and statutory multiplier.
Using a reliable overtime calculator ensures precision, transparency, and compliance for both employees and employers, eliminating manual errors and payroll disputes.
FAQ
How is overtime pay calculated in India?
Overtime pay is calculated using the ordinary hourly wage multiplied by overtime hours and the statutory overtime rate, which is usually double wages.
What is the standard overtime rate for employees?
Most establishments in India pay overtime at 2 times the ordinary rate of wages for hours worked beyond daily or weekly limits.
Which salary components are included in overtime calculation?
Overtime is generally calculated on ordinary wages, which typically include basic pay and dearness allowance, while bonuses and reimbursements are usually excluded.