A store supervisor at a 30-person distribution warehouse in Indore worked 14 hours of overtime in September, most of it in the week before a festival. The owner wants to pay it correctly, and the accountant has two different numbers depending on which allowances go in. One of them is right.
The overtime calculation formula
Overtime pay = (monthly ordinary wage ÷ 208) × 2 × overtime hours.
208 is 26 working days of 8 hours, the month an hourly rate is worked out on. The 2 is the legal minimum: overtime is paid at twice the ordinary rate, never less. The ordinary wage is Basic, DA and the allowances paid every month. Bonus is left out, and so is any overtime already paid.
The worked example
| Part of the wage | A month |
|---|
| Basic | ₹13,000 |
|---|
| HRA | ₹5,000 |
|---|
| Conveyance | ₹2,000 |
|---|
| Special allowance | ₹2,000 |
|---|
| Ordinary wage | ₹22,000 |
|---|
- Hourly ordinary rate: ₹22,000 ÷ 208 = ₹105.77.
- Overtime rate: ₹105.77 × 2 = ₹211.54 an hour.
- Overtime pay: ₹211.54 × 14 hours = ₹2,962.
₹2,962with HRA and conveyance in
₹2,019with them left out
₹943short, every month like this
The HRA question: the accountant's lower figure left out HRA and conveyance. In January 2026 the Supreme Court held that the ordinary rate for overtime includes allowances like HRA and transport, and leaves out only bonus and overtime itself. The lower number underpays by ₹943 this month.
You can run your own figures on the overtime calculator, which uses the same function as Facto Lite's payroll.
Overtime pay rules in India
For factories, the rule is overtime at twice the ordinary rate for hours beyond the daily or weekly limit, which the Factories Act set at 9 a day and 48 a week. The double rate carries into the OSH Code, in force since 21 November 2025, with the daily hours set by each state's rules. Shops, offices and warehouses fall under their state's shops and establishments act, which sets its own daily hours. Many states also pay overtime at double; a few differ, so check yours.
People in a position of management or confidence are usually outside the overtime rules. A store supervisor who allocates shifts but doesn't hire, fire or sign off spending is usually inside them.
Overtime at double wages, for monthly salaried staff
The mistake with monthly staff is the divisor. Dividing by 30 days of 8 hours, 240, makes the hourly rate about 13% lower than the 208 the rule uses, and every overtime hour is underpaid by the same share. For daily-rated workers the day's wage divided by 8 gives the hourly rate directly.
Maximum overtime hours per quarter
The Factories Act allowed 50 hours of overtime in a quarter, and some states raised that to 75. The OSH Code leaves the total to each government's rules, and several states have raised it well above the old figure: Karnataka, for one, allows 144 hours a quarter with the worker's written consent. Check the current notification for your state before planning a season around it, and keep the register, because the quarterly total is what an inspector adds up.
Keeping overtime honest
Overtime gets approved verbally and recorded vaguely. None of it is dramatic, and all of it leaks.Jennifer Elisha, The Real Cost of Manual Attendance in a Factory
That was written about a 340-person plant, and a 30-person warehouse leaks the same way on a smaller scale. Three habits fix most of it:
- Work overtime out from the attendance record, never from what somebody remembers at month end.
- Set a minimum, such as 30 minutes, below which extra time isn't counted, and a weekly cap if you have one.
- Have the supervisor who saw the work send it for approval, and somebody else approve it.
If overtime still lives in a notebook and a WhatsApp group, Excel and WhatsApp against software goes through what changes when it moves.
