Overtime disputes are rarely about the rate. They are about whether anyone can prove the hours. Here is the arithmetic, and the record that makes it stand up.
In India, overtime is payable at twice the ordinary rate of wages for hours worked beyond the statutory limit — 48 hours a week, and 9 hours a day under most state Shops & Establishments Acts and the Factories Act. The hourly rate is usually derived as monthly wages ÷ 208 (26 working days × 8 hours), so an employee on ₹26,000 basic plus DA has an ordinary rate of ₹125 an hour and an overtime rate of ₹250. The Occupational Safety, Health and Working Conditions Code, in force since November 2025, keeps the double rate and caps overtime at 125 hours a quarter. Everything that follows is how to apply this without an argument at month-end.
Ordinary hourly rate = monthly wages ÷ 208. Monthly wages here means the components counted as wages — basic and dearness allowance in most rules. Overtime pay = overtime hours × ordinary hourly rate × 2.
| Example 1 | Basic + DA ₹20,800. Hourly rate ₹100. 12 overtime hours in the month → 12 × 100 × 2 = ₹2,400. |
|---|---|
| Example 2 | Basic + DA ₹31,200. Hourly rate ₹150. Worked 10 hours on a 9-hour day, five times → 5 overtime hours → 5 × 150 × 2 = ₹1,500. |
| Example 3 | Basic + DA ₹26,000. Hourly rate ₹125. Worked 52 hours in a 48-hour week across six days of 8h40m — no single day exceeded 9 hours, but the week did → 4 overtime hours → 4 × 125 × 2 = ₹1,000. Weekly overtime is the one most spreadsheets miss. |
Two decisions to write into your policy: whether the divisor is 208 or 26 × your actual daily hours, and whether overtime is computed daily, weekly, or both (both is correct under most rules — an hour counts if it exceeds either limit, but is not paid twice).
Compensatory off — a paid day off in lieu of extra hours — is permitted in specific circumstances under most state Acts, typically for work on a weekly off or holiday, and usually within a set period. It is not a general substitute for overtime pay on ordinary weekdays, and offering "comp-off instead of OT" as a blanket policy is a common small-business exposure.
If you use comp-off, record it like leave: a credit with a date, an expiry, and a debit when taken. An untracked comp-off is a promise nobody can find at exit time — see full and final settlement for what that costs.
An overtime claim is an arithmetic on two timestamps. If the timestamps are captured when they happen — check-in, check-out, on the employee's own device, with the time set by the server — the calculation is mechanical and the dispute has nothing to attach to. If the hours are typed into a sheet at month-end from memory, the dispute is the record.
What to keep, per day: start time, end time, break deduction, the applicable daily limit, hours beyond it, and the running weekly total. Most state rules also require an overtime register; the daily record is what fills it. How the three capture methods compare on exactly this point.
| Ordinary limit | 9 hours/day, 48 hours/week (state Shops & Establishments Acts; Factories Act) |
|---|---|
| Rate | Twice the ordinary rate of wages |
| Hourly rate formula | Monthly wages ÷ 208 (26 days × 8 hours) — confirm your state's divisor |
| Quarterly cap | 125 overtime hours (OSH Code); state rules may be lower |
| Excluded | Managerial, supervisory and confidential roles, by nature of work |
| Comp-off | Permitted for weekly-off or holiday work under state rules; not a substitute for weekday overtime pay |
| Record | Daily start/end times captured on the day; overtime register |
Overtime is paid at twice the ordinary rate of wages for hours worked beyond the statutory limit, usually 9 hours a day or 48 hours a week. The ordinary hourly rate is derived by dividing monthly wages — typically basic plus dearness allowance — by 208, which is 26 working days of 8 hours. Overtime pay is the overtime hours multiplied by that hourly rate multiplied by two.
Hourly rate = monthly wages ÷ 208; overtime rate = hourly rate × 2. On ₹26,000 monthly wages the hourly rate is ₹125 and the overtime rate ₹250. Some states use 26 × the actual daily hours as the divisor, so state the divisor in your policy.
For employees covered by the Factories Act or a state Shops and Establishments Act, yes — overtime beyond the daily or weekly limit must be paid at double the rate regardless of whether the employee is paid a monthly salary. Employees in managerial or supervisory roles are generally excluded, based on the nature of the work rather than the job title.
Only in the circumstances your state's rules allow, typically for work on a weekly off or a holiday, and usually within a defined period. Comp-off is not a general substitute for overtime pay on regular working days. If you use it, record credits and debits with dates, as you would leave.
The Occupational Safety, Health and Working Conditions Code sets a ceiling of 125 overtime hours in a quarter. Individual state rules may set a lower limit, and daily spread-over limits still apply.
Daily start and end times captured at the time, the break deduction, the applicable daily and weekly limits, the hours beyond them, and the overtime register most state rules require. Timestamps recorded on the day are what make the calculation defensible; totals typed at month-end are not.
Merik records the two numbers overtime depends on: the check-in and check-out time, captured when the employee taps them, with the location alongside. Late marks and half-days apply by your configured rules, and the day's hours sit in the attendance record rather than in anyone's memory. That gives you the daily and weekly totals a defensible overtime calculation needs.
Merik does not compute overtime pay automatically. When you have the month's overtime figure, it goes on the payslip as an incentive line alongside basic, HRA, other allowance, professional tax, LOP and arrears — and the payslip is generated, stored and emailed from there. See the attendance and payroll modules.
A clear, consistent rule set removes disputes and keeps payroll accurate.
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The per-day divisor argument, settled with actual arithmetic.