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Overtime Policies under Labour Laws in India for Private Companies

Majority of the working sector does not know that for overtime beyond working hours, employees hold certain rights that they need to exercise, as per the labour laws in India. Let us find out about these overtime rules and procedures in India.
Written by:
Swati Shalini
Published on

Labour laws in India are crucial for safeguarding the rights and interests of workers across the nation. However, many employers and employees must be made aware of the extensive provisions in these laws, particularly concerning overtime wages. Despite various labour legislations governing overtime hours and payment methods, these concepts often need to be revised within the working sector. To grasp the concept of overtime, it's essential first to understand regular working hours outlined in Indian labour legislation. Regular working hours represent the designated number of hours employees are expected to complete their shifts. 

Several provisions in different labour laws elucidate these regular working hours:

1. Factories Act, 1948: -Section 51 restricts adult workers from working more than forty-eight hours a week in a factory. -Section 54 stipulates that no adult worker should work more than nine hours per day in a factory.

2. Minimum Wages Act, 1948: -Section 13 empowers the appropriate government to fix the hours constituting a typical working day for scheduled employees. In legal terms, overtime refers to any hours that exceed regular working hours. Various employment laws define total working hours, including overtime, and the right to overtime pay. For instance, the Karnataka Shops and Commercial Establishments Act, 1961, mandates that total working hours, including overtime, not exceed ten hours a day. Therefore, any work exceeding nine hours qualifies as overtime, entitling employees to receive overtime payments per legal provisions

Critical provisions on overtime and supplementary regulations under various Labour Legislations include:

1. Factories Act, 1948: Section 59 ensures extra wages for overtime work exceeding nine hours a day or forty-eight hours a week. Sections 55 and 56 detail intervals for rest and spread-over periods, respectively.

2. Minimum Wages Act, 1948: Section 13 addresses payment for work on rest days at rates not less than the overtime rate. Section 14 mandates overtime payment for work exceeding regular hours based on prescribed rates.

3. The Mines Act, 1952: Section 33 ensures extra wages for overtime work exceeding specified hours.


4. The Building and Other Construction Workers Act of 1996:   It regulates construction workers' employment and working conditions. Section 29 guarantees overtime wages twice the ordinary rate for work exceeding regular hours.

5. State-specific Acts: For example, the Karnataka Shops and Commercial Establishments Act, 1961, and the Maharashtra Shops and Establishments Act, 2017 have provisions tailored to the respective states' requirements.

How many hours are you legally allowed to work in a day in India?

There are numerous overtime rules and procedures in India stipulating different periods of working hours under the labor law. Section 51 and Section 59 of the Factories Act - 1948[2] states,

“No employee is supposed to work for more than 48 hours in a week and 9 hours in a day. Any employee who works for more than this period is eligible for overtime remuneration prescribed as twice the amount of ordinary wages.”

Additionally, Section 14 of the Minimum Wages Act, 1948[3] states,

“When the minimum wages of an employee are fixed for a particular period of time and the employee works beyond that period, then the employee has to be paid overtime wages for the extra time.”

Every state in India has its own Shops and Establishment Act (SEA)[4] which also lays down overtime rules and procedures for workmen employed in different institutions. The SEA is applicable to all managerial and non-managerial positions, in every Indian shop and establishment.

The overtime rules also state that the employees must be provided at least one break for half an hour between the working hours and the entire working period per day must be calculated in such a way that no working period exceeds 5 hours without an interval.

The total number of working hours in India in a day must be 12 and a half hours, limiting the maximum number of overtime hours in a day at 2 hours.

Overtime rules under the Factories Act, 1948 also specifies the punishment in case an employer violates these provisions.

Any employer found to be contravening these provisions would be liable for punishment of imprisonment up to 2 years and fine of up to Rs. 1 lakh or both. If the employer continues to violate the provisions after conviction, a fine of Rs. 1000 per day is levied for each day of violation.

Under the overtime payment rules in India, overtime wages are paid in two ways – either on a per hour rate or a per piece rate in factories.

  • In the per hour or hourly rate, the per hour wage of an employee is calculated and double the amount is paid for every extra working hour.
  • In per piece method, an employee is paid overtime for every extra piece made during the overtime period.

How overtime is calculated in India?

The Indian employment laws and Indian labor laws are still under-defined when it comes to overtime rules in the private sector in India. The employees in the private sector are often subjected to extra working hours with no remuneration for the overtime work done.

One of the most famous examples is the demonetization period in India. When more than 10,000 bank employees had to work beyond their working hours in both private and public sector banking firms, without getting any overtime wages.

In the private sector, the working hours and timings are stipulated by the employer in the company’s HR policies , drafted in accordance with the overtime rules and procedures in India.

The company's overtime policy must clearly state the reporting time and working hours for all employees along with provisions relating to leaves and holidays. The HR policy must also include the company’s policy about any remuneration for the extra time any employee works.

The overtime work must be voluntarily taken up by the employee and not forced through an involuntarily or fraudulently signed agreement.

The employer has to consider certain factors before allowing overtime for an employee, like any sudden or unpredicted increase in work or demand, where the employee voluntarily wishes to work overtime to increase their productivity.

For this, the employer must have an overtime approval policy in place that states the conditions in which overtime can be approved by the employer.

Every employer is required to maintain a register of attendance for overtime that lays down the details of the employees who work beyond working hours and the amount of remuneration to be paid if any.

With an increasing number of MNCs and BPOs in India, the working hours in an MNC in India are extended to night shifts as well, where employees have to work in accordance with the working hours of the country in which the parent company is located. However, there are no specific laws that deal with night shifts in India.

In the white-collar sector and management level employment, employees rarely raise demand for overtime payment, even though as per Indian employment laws, they are legally entitled to remuneration. However, if no overtime policy is made by the employer, it leaves a chance of unwanted employment disputes in the future.

It becomes important for an employer to get the company overtime policy and employment agreement drafted for overtime calculation in India. You need to have a good employment lawyer to avoid any unnecessary disputes over overtime provisions and laws.


Despite the clarity provided by labour laws, challenges and misconceptions persist in implementing overtime regulations. Many employers may need more awareness of these laws or deliberately flout regulations, while employees may hesitate to assert their rights due to fear of retaliation or job insecurity. Concerted efforts from regulatory authorities, employers, and employees are necessary to ensure effective enforcement and compliance with overtime regulations. Government agencies must conduct regular inspections to identify violations, while employers should invest in employee education and training programs to enhance awareness of labour rights and responsibilities. Advancements in technology offer promising solutions for streamlining overtime management processes and ensuring accurate payment practices. Automated time-tracking systems can mitigate manual errors and provide transparency in monitoring and verifying overtime payments. In conclusion, understanding and adhering to overtime regulations are essential for promoting fair labour practices and protecting workers' rights. These regulations must be reviewed and adapted to address emerging challenges and ensure their relevance in the evolving labour landscape. Collaboration among employers, employees, and regulatory authorities is crucial to ensure fairness and justice in the workplace. By fostering a culture of compliance and accountability, India can strive towards creating an environment where workers' rights are respected and labour laws are upheld with diligence and integrity.

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External Links:

[1] Labour Laws in India - Labour laws in India such as the Industrial Disputes Act, 1947 (“ID Act”) provide protection to workmen such as redundancy/retrenchment compensation. 

[2] Employee Overtime Rules & Procedures - (refer from page 39 - 41) - The majority of the working sector does not know that for overtime beyond working hours, employees hold certain rights that they need to exercise, as per the labor laws in India.

[3] The Minimum Wages Rules, 1950 -  The wages of an employed person shall be paid to him without deduction of any kind except those authorized by or under these rules. 

[4] Shops and Establishment (Regulation of Employment & Conditions of Service) Bill, 2016 - Some of the major reforms this bill seeks to propose are: Working Hours of Employees: Establishments are permitted to operate on all days in a year and can also decide their opening and closing timings.