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Understanding How To Calculate Overtime

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By Author: Priya Singh
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Overtime laws in India: Overtime calculation for wage earners in India is done as per the factories act, 1948. As per section 59 of the Factories Act, wage earners should be paid double the rate of his ordinary wages for every hour of overtime work.

Hence if a worker was earning Rs60 as ordinary wages per hour, he will be earning Rs120 for overtime work. This has also been mentioned in the Minimum Wage act and rules act and the State Shops and Commercial Acts.


In order to calculate the overtime for one hour of wages, then we should divide the total wages earned in a month by 26 (number of days of work in a month).
This would give us the wage earned in a day. Then divide the wages earned in a day by 8 (total number of hours in a day).

Then you will arrive at the wage earned per day. So, if you want to pay overtime to your workers, you will need to provide double of the ordinary wage for an hour.

US laws:

The laws in US for overtime are similar. An employer needs to pay the worker 1.5 times the ordinary wage rate. Hence if a worker earns 6 dollars every hour, during overtime he needs to be paid 9 dollars.

British laws:

Britain however does not have any special laws on overtime. An employer does not need to pay his workers any over time. He simply needs to ensure that his workers get a minimum pay. If there are any overtime bonuses, then it is mentioned in the contract.

Europe Laws:

European laws on overtime is a little more complicated. The law states that if an employee has worked 138 hours over a period of 4 months, 250 hours per year over statutory threshold of 40 hours (per week), the he is eligible for overtime.

For the first two hours the employee does an over time, he or she gets 50% of the ordinary wages. For every hour put in beyond the first two hours, the employee gets 100% raise in overtime.

Australia laws:

Australian laws are a mix of US and UK laws. If the workers are represented by a labour Union, then the employer may have to pay 1.5 times the ordinary wage.

If the employers want to pay a rate that is above or below the norm, then a special provision is included in a contract between the employer and the employee.

This blog should have given you a summary of how laws in various countries differ for overtime pay. Hence, the next time you hire a person working overseas for your company, make sure you check the local overtime laws. For more details on overtime pay in other countries, please visit https://www.easysourceindia.com/

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