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:
- The total number of hours of work, inclusive of the overtime, shall not exceed 60 hours in any week.
- 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 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 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:
- 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.
- 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]
- 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.
- 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.
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.
-Nithya Krishnamurthy, Advocate and Associate
-Shruthi Praful, Advocate and Associate
-Felix Mathew, Advocate and Associate