Overtime – Finding The Right Balance

INTRODUCTION

The majority of the working sector in our country is unaware of all the rights guaranteed under the different Labour laws, especially with respect to ‘Hours of Work’. India mainly has 2 laws that govern and regulate the working hours of employees/workers:

  • The Factories Act – for factory workers
  • The Shops and Establishments Act – for non-factory workers.

In this article, the concept of ‘Overtime’ is discussed in brief as under The Factories Act, 1948 and under Karnataka’s and Tamil Nadu’s Shops and Establishments Act of 1961 and 1947, respectively.

WHAT IS ‘OVERTIME’?

The word ‘Overtime’ refers to the number of hours worked by an employee exceeding the prescribed working hours fixed in a day, week, or month.

Section 14 of the Minimum Wages Act mentions that any worker whose minimum rate of wages is fixed with a fixed wage period, such as by the hour, by the day, or by any other such period, and if a worker works more than that number of hours, it is considered to be Overtime. In case if the number of hours constituting a normal working day exceeds the given limit, then the employer will have to pay him for every hour or for part of an hour for which he has worked in excess at the overtime rate.

Therefore, when a worker or an employee is working in excess or beyond the normal working hours fixed, it is referred to as ‘Overtime’ and such a worker or employee is entitled to remuneration known as Overtime wages.

OVERTIME UNDER THE FACTORIES ACT, 1948

The main purpose of the Factories Act, 1948 is to regulate the working conditions in factories, to regulate health, safety, welfare, and annual leave, and enact special provisions in respect of young persons, women, and children who work in the factories.

As per Section 51 and 54 of the Factories Act, a worker cannot be employed for more than 48 hours in a week or for more than 9 hours in a day.

Thus, any worker who works for more than the prescribed daily or weekly threshold of working hours is eligible for overtime remuneration prescribed at twice the rate of ordinary wages. [Section 59(1)]

In the event that a worker is required or allowed to work beyond the prescribed limit as mentioned above, the following 2 conditions shall be satisfied:

  1. The total number of hours of work, inclusive of the overtime, shall not exceed 60 hours in any week.
  2. The total number of overtime hours worked by any employee shall not exceed 50 hours in any quarter (three continuous months). This period varies from state to state and an exemption can be obtained from the Factories department to increase this threshold to 75 hours.

Furthermore, there is the restriction on double employment wherein a worker cannot work in more than one factory [Section 60].

The Act also specifies that the employees must be provided at least one break for half an hour after 5 hours of work and the entire working period per day, must be calculated in such a way that no working period exceeds 5 hours without an interval.

In R Ananthan v. Avery India 1972(42) FJR 304 (Mad HC), it was held that “An employee working outside the factory premises like field workers, etc. on tour outside headquarters are not entitled to overtime.”

OVERTIME CALCULATION

Overtime wages are paid in two ways – either on a per hour rate or a per piece rate in Factories.

  1. 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.
  2. In the per piece method, an employee is paid overtime for every extra piece made during the overtime period.

However, the hourly rate is the most prevalent method, which is more accurate and easier for the payment to the employees.

OVERTIME UNDER SHOPS AND COMMERCIAL ESTABLISHMENTS

 

Overtime Under Karnataka Shops And Commercial Establishment Act, 1961

The Shops and Commercial Establishment Act, the legislation enacted by every state in India, is one of the most important regulations drafted not only to protect the rights of the employers as well as employees working in the shops and commercial establishments but also constantly strives to regulate the working conditions of employees uniformly irrespective of the establishments they belong to. The Act mainly regulates aspects relating to working hours, interval(s) for rest, overtime work, opening and closing hours, leaves and holidays, payment of wages, terms of service, maternity leave, and benefits, rules for employment of children, etc.

The Karnataka Shops and Commercial Establishment Act governs the functioning of shops and commercial establishments in Karnataka. Chapter III of this Act provides for the hours of work, overtime, etc.

As per Section 7(1), an employee shall not be required or allowed to work for more than 9 hours on any given day or 48 hours during any week.

In the event that an employee is required or allowed to work beyond the prescribed limit as mentioned above, the following 2 conditions shall be satisfied:

  1. The total number of hours of work, inclusive of the overtime, shall not exceed 10 hours in any day, except on the days of stock-taking and preparation of accounts.
  2. The total number of overtime hours worked by any employee shall not exceed 50 hours in any quarter (three continuous months).

Thus, when an employee is required or allowed to work overtime, he/she shall be paid remuneration at twice the rate of his normal wages calculated by the hour. [Section 8(1)]

Overtime Under Tamil Nadu Shops And Commercial Establishment Act, 1947

The Tamil Nadu Shops and Commercial Establishment Act similarly governs the functioning of shops and commercial establishments in Tamil Nadu.

Under this Act, an employee shall not be required or allowed to work for more than 8 hours on any day or 48 hours during any week, in any shop or any establishment. Thus, the total number of hours of work, including the overtime, shall not exceed 10 hours in any day or 54 hours in any week. [Section 9(1) & Section 14(1)]

Accordingly, an employee working overtime shall be paid overtime wages at twice the ordinary rate of wages. [Section 31]

PENALTY

  1. Under the Factories Act, any violation of overtime regulations is punishable with imprisonment for a term which may extend to 2 years or with a fine which may extend to Rs. 1,00,000/- (one lakh rupees) or with both, and if the contravention is continued after conviction, with a further fine which may extend to one thousand rupees for each day on which the contravention is so continued.
  2. The penalties under the Shops and Establishments Act depend on the specific laws of the states. But in general, it is very low in comparison with the penalties under the Factories Act.

OVERTIME UNDER THE LABOUR CODES

The government is in the process of implementing 4 labour codes that will subsume 29 labour legislations. The Code on Wages(Wage Code), 2019 and the Occupational Safety Health and Working Conditions(OSH) Code, 2020 both lay down provisions in relation to overtime. Interestingly, the Code on Wages extends the requirement to pay overtime to all employees, including administrative, supervisory, managerial and other staff. The OSH Code, through the draft rules, sets the overtime threshold at 125 hours a quarter, we will have to wait and see how these changes are going to affect the concept of overtime for both Factories and Establishments.

CONCLUSION

The Constitution of India ensures the protection of interests and rights of employees under Article 14-16, 19(1)(c), 23-24, 38, and 41-43A. In pursuance of such rights guaranteed, The Karnataka HC held that the denial of overtime pay to an employee amounts to infringement of Articles 23 and 300-A of the Constitution of India.

Since working overtime can have a significant impact on the employee’s health and can lead to burnout, fatigue, and stress, it is important that employers ensure that the working conditions are in accordance with the regulations drafted and additionally, with the changing environment, existing laws need to be amended from time to time for the benefit of employees.

Coauthored by 

-Nithya Krishnamurthy, Advocate and Associate

-Shruthi Praful, Advocate and Associate

-Felix Mathew, Advocate and Associate

Share This Post

Share on facebook
Share on twitter
Share on linkedin

1 thought on “Overtime – Finding The Right Balance”

  1. B.Chandrashekara Shetty

    Complements for the good and collective attempt made by the associates. More than the rights, it is also aimed at the health, safety and family needs of the workers community. One should also think of the basis and origin behind such rules. ILO convention is the basis and accepted policy of every country including India which is a founding members of ILO. Besides, Factories/S&CE two acts, there are still more Acts under respective schedules of employment, including Minimum wages Act but prescribed maximum hours of work also differs depending on the nature of work such as Motor Transport/Journalist/Mines etc., The new Codes deals with Central statutes such as factories Act etc., as Shops& Commercial Est Act is the State issue.

    -B.C.Shetty.

Leave a Comment

Your email address will not be published. Required fields are marked *

Share:

Share on facebook
Share on twitter
Share on linkedin

More Posts

Scroll to Top

B. Chandrashekar Shetty - Advocate

Mr. Chandrashekar Shetty is a Senior Labour Law Compliance Auditor at BCP Associates and has audited multiple client companies across India. He is also a member of our senior legal advisory practice. Previously he has worked as Deputy Controller, Manager-Industrial Relations and Industrial Relations Officer in KPTCL, Bangalore for more than 30 years. Prior to this, he has dealt with Legal, Personnel and IR matters including Wage Settlements, Grievance Machinery, Manpower Study and Social Security Compliances for about 10 years. He is a Faculty member of Labour Law, HRD Centre, KPTCL Bangalore.

Mr. Shetty holds a B.Com. and L.L.B. degree, Post-Graduate Diploma in Business Administration, Diploma in Public Relations from Bangalore University and PG Diploma in Industrial Relations & Personnel Management from Bharatiya Vidya Bhawan. He is enrolled as Advocate in Karnataka Bar Council and is a Govt. Arbitrator of Chit Funds in Karnataka.

S Venugopal Rao

S Venugopal Rao is an experienced labour law and service matters expert and is a member of the senior advisory team at BCP Associates. Having joined the chambers of Mr. B C Prabhakar in 2012, he is knowledgeable and well versed in multiple employment and labour law topics. S Venugopal Rao holds a Bachelor’s degree in Science from Karnataka University, Dharwar and Bachelor of Law from Bangalore University. He enrolled as advocate in Karantaka State Bar Council in 1976. He joined the chamber of Sri. Kolachalam Srinivasa Rao a leading civil advocate. After practicing for 6 years at Ballari, he joined Orient Paper Mills, Orissa (of G P Birla Group). He was designated as Manager (Law) under the Factories Act in 1995. In 1999, he joined Andhra Pradesh Paper Mills Rajahmundry as Manager Legal and was subsequently elevated as Dy. General Manager (Legal). As Factory Manager & Legal Head, he oversaw compliance of Factories Act and Rules there under towards safety, health and welfare, including compliance under Pollutions and Environmental laws and Explosives Act, etc. Additionally, he is well acquainted with Environment Management System ISO 14001: 2004, Occupations, Health and Safety Series 18000:1999. As Legal head in APPM he has briefed and appeared along with Senior Advocate before Appellate Authority constituted under Water (Prevention & Control of Pollution) Act. He retired from the services of Andhra Pradesh Paper Mills in 2011. As legal head he has handled important cases both in Labour and Civil and has experience in drafting and vetting Contracts, Agreements, Lease Agreement, Conveyance Deeds, , Affidavits and scrutiny of several legal and other documents, Preparing and settling Petitions, Appeals, Plaints, Written Statements, Rejoinders, Affidavits and Written Arguments etc. for submission/pleadings for various legal proceedings.

C K Devappa Gowda - Advocate

C.K. Devappa Gowda (CKD) is an Advocate and Labour Law expert. He holds a Bachelor’s Degree in Science from the University of Mysore and a Degree in Bachelor of Law from Bengaluru respectively. He also holds a Diploma in Social Service Administration from the National Institute of Social Science, Bengaluru. After completing his studies, he had enrolled as a Advocate and initially practiced in the Civil Code attached to the office of BCP. He then worked as Personnel Officer in Chemicals and Textile Manufacturing Industries for 5 years. Thereafter took up employment in one of the largest Public Sector Bank. He has worked in different parts of the country and has extensive experience in the cross country IR domain. The significant part of his service was at corporate level overseeing and implementing HR policies and practices and management of IR. He has been a member of personnel committee of Indian Bank Association. After retirement from service, Mr. Gowda has been working with Mr. BC Prabhakar’s firm for the last 12 years. He has expertise in all areas of people management, drafting of documents relating to service matter including the settlements under the ID Act. He has dealt with all employment laws including appearance before the Courts, Tribunal and Authorities under the different Labour Laws. Mr. Gowda is one of the senior Labour Law experts at BCP Associates.

Srijatha Ghosh - POSH Specialist & Advocate

Srijata Ghosh serves as external member on the Internal Committee of several Companies across various sectors. She handles all kinds of POSH related matters including investigations and inquiries. She provides Training on Sexual Harassment across all verticals for Managers and Senior Management, General Awareness for all employees and Internal Committee members on the legislation (The Sexual Harassment of Women at Workplace Prevention, Prohibition and Redressal Act, 2013). She also formulates Policies for Prevention of Sexual Harassment at Workplace (“POSH”) and advises Companies on setting up of their Internal Committees. Srijata is involved in providing Legal Advisory services on POSH and other labour law matters for various clients.

In her previous experience, she has extensively dealt with End-to-End Contract Management, Due Diligence, POSH Compliances, Legal Advisory, etc. Srijata worked with Companies like Accenture India Private Limited, Quess Corp., Capgemini Business Services (India) Limited and Pramata Knowledge Solutions Private Limited. Srijata has handled varied legal issues including drafting, vetting and negotiation of contracts, drafting policies of various organizations. She has resolved issues relating to employment laws and has worked closely with the HR teams. She has provided legal advisory services to senior management. She was also associated with Kolkata High Court in counselling clients with legal matters such as Property, Due Diligence etc. Srijata has worked in an LPO Service Firm, Manthan Legal Services Private Limited for Legal Research, depositions, medical summaries, demand drafting etc.

Srijata completed her B.A.LL.B from M. S. Ramaiah College of Law, Bangalore University in 2009. Srijata is a member of the Karnataka Bar Council since 2010. She is also a member of the Gender Sensitivity Sub Committee of Karnataka Employer Association (KEA).

Caroline Lobo - POSH Specialist & Advocate

Caroline Lobo has been with BCP Associates for the past 2+ years. She has been handling matters and Inquiries related to the POSH Act including conducting inquiries and trainings/awareness programmes for Senior Management, employees as well as members of the Internal Committee on the POSH Legislation (The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 (“Act”) to address Workplace Harassment of Women. She is a member of the Internal Committee for many varied companies and organisations and has reviewed and scrutinized numerous hearings and inquiries on matters relating to sexual harassment at workplace.

She has also handled matters relating to employer-employee related Enquiries, wherein she has reviewed and conducted hearings and enquired into the matters and has guided the Internal Committee and provided guidance in providing recommendations to the management. She is also a Member of the Gender Sensitivity Sub-committee of Karnataka Employer Association (KEA).

Prior to joining BCP Associates, Caroline has has a wide range of experience in corporate, commercial and contract law, mergers and acquisition and has undertaken drafting, vetting, negotiating and finalizing legal and commercial transactions. She started her career in litigation then moved onto the Corporate sector. In the span of 13 years, she has worked at Chambers of Advocate Jayashree Murali, Krishnamurthy and Co. Legal Consultants, Colt Technology Services and Oracle India Pvt. Ltd. She always had a keen interest in Women and Child related issues. She has worked with Child Welfare Committee and NGOS’s. In addition, she has worked with Swasthi Health Resource and Centre, where she was the External member to the Internal Committee (IC). She worked closely with the committee in strategizing, planning, reviewing and implementing the assigned tasks, which included building material to raise awareness against sexual harassment at workplace. Further, she has been involved in conducting inquiries into matters related to sexual harassment at workplace.

Caroline earned her Law degree from University Law College, Bangalore, from where she graduated in the year 2005.

Manoj Kumar – Senior Associate

At BCP Associates, Manoj Kumar is involved in managing and conducting labour law compliance audits of principal employer and contractors. He is also involved in client co-ordination and conducting labour law training programs for vendors. He has conducted on-ground labour law audit for factories. Manoj also provides support in advising vendor clients on labour law queries. He completed B.A., LL.B. from BMS College of Law, Bangalore in 2016

Rashmitha Venkatachalam Das - POSH Specialist & Advocate

Rashmitha Venkatachalam Das is the External Member of the Internal Committee of several reputed Organizations across various sectors. Handling complex inquiries has been her forte and she is extremely passionate about it. She is actively involved in providing Training on Sexual Harassment (Prevention, Prohibition and Redressal) Act, 2013 across all verticals for Managers and Senior Management, General Awareness for all employees and Internal Committee members. Rashmitha possesses capabilities in delivering sessions in Hindi and Kannada, in addition to English. She has formulated Policies for Prevention of Sexual Harassment at Workplace (“POSH”), advised companies on setting up of their Committee. Rashmitha is involved in providing Legal Advisory services on POSH for various clients spread across diverse sectors. She has also been handling domestic enquiries for various clients. 

Rashmitha possesses experience both at Law Firms and Corporates in various capacities. She started her career at Krishnamurthy and Co, Legal Consultants and then moved on to work as an In- House Legal Counsel with Companies such as Biocon Limited, Columbia Asia Hospitals Private Limited, Adecco India Private Limited. With a long stint in the Corporate side, Rashmitha decided to pursue further education in Law with a specialization in Labour and Employment Laws. She has rich experience in drafting, vetting and negotiation of various types of contracts, providing legal opinions and has driven the team in formulating process and procedures and their implementation. She has drafted several employment related policies in Corporates. Rashmitha has been a part of various key committees in Organizations and assisted committees in scrutiny of documents pertaining to human organ transplant as well as clinical trials.

Rashmitha holds an LL.M. in Labour and Employment Laws from University Law College, Bangalore, which she completed in the year 2018 with Two Gold Medals. She is also a Rank Holder at the University. She has completed BA, LL.B. from Bangalore Institute of Legal Studies, Bangalore University in the year 2009. Rashmitha is a member of the Karnataka Bar Council since 2009 and also a member of the Gender Sensitivity Sub Committee of Karnataka Employer Association (KEA).

Manisha Vidyadhar – Senior Associate

At BCP Associates, Manisha Vidyadhar is involved in managing and conducting labour law compliance audits of principal employer and contractors. She is also involved in client co-ordination and conducting labour law training programs for vendors. She has conducted on-ground labour law audit for factories. Manisha also provides support in advising vendor clients on labour law queries.  She completed B.A., LL.B. from BMS College of Law, Bangalore in 2016.

Amrutha Ananth – Senior Associate

At BCP Associates, Amrutha Ananth is involved in managing and conducting labour law compliance audits of principal employer and contractors. She is also involved in client co-ordination and conducting labour law training programs for vendors. She has conducted on-ground labour law audit for factories. She also provides support in advising vendor clients on labour law queries.

Amrutha is also part of the labour law advisory and HR Policy practice and is actively involved in drafting opinions on various aspects of labour laws and formulate and review employment policies and procedure.

Amrutha completed B.A., LL.B. from Christ University, Bangalore in 2015. She is also a semi-qualified Company Secretary.

Sunil Arya – Principle Associate

At BCP Associates, Sunil Arya is part of the labour and employment law advisory and HR Policy practice and is actively involved in drafting and reviewing of employment contracts, opinions, HR policies, employee handbook, show cause notice, etc. for various clients spread across diverse sectors. He conducts training on labour and employment laws. Sunil is also involved in labour law compliance audits of principal employer and contractors and has conducted on-ground labour law audit for factories. In addition, he is engaged in knowledge creation and management of the firm and keenly writes on developments in labour and employment laws.

Prior to joining BCP Associates, Sunil has 10 years of post-qualification experience in diversified portfolios of advisory, drafting, policy analysis and dispute in the domains of contracts, general civil matters, employment law, competition law and construction arbitration matters. Sunil started his career as a Law Researcher in Delhi High Court. He moved on to be part of regulatory analysis team of CIRC, a unit of CUTS International. In addition, Sunil has been part of legal team of Jindal India Thermal Power Limited. He has also taught competition law, tax law and investment law at VIPS, Delhi.

Sunil holds LL.M. from The Indian Law Institute, Delhi. He is First Rank Holder in his thesis. He completed B.A, L.L.B. (Hons.) from I.P. University, Delhi. He also holds First Rank in P.G. Diploma in Competition Policy and Laws from The National Law University, Delhi.

Chandrakala K A – Principle Associate

At BCP Associates, Chandrakala has 12+ years of experience in conducting and managing labour law compliance audits of principal employer and contractors. She is also involved in co-ordination with many clients. She has conducted on-ground labour law audit for factories. She also provides support in advising vendors on labour law queries. Chandrakala is actively involved in research and providing valuable inputs to the firm pertaining to updation in labour law audit function.

Chandrakala started her career in litigation in chamber of Sri. Ashok where she was involved in drafting, pleading and appearance before Karnataka High Courts and lower courts on the criminal side.

Chandrakala completed B.A in Arts from Kuvempu University, Shimoga in 2003 and LL.B. from Mangalore University in 2006.

X