Salary and payroll
Overtime pay: what hours past the shift are worth
Overtime pay is the extra amount an employer pays for hours worked beyond the normal daily or weekly hours fixed for a job. The hours are counted from the recorded start and finish times, they have to be authorised, and they are paid at a higher rate than ordinary hours, set by the act that covers the establishment or by the employer's own written policy.
Last reviewed: September 2026
Also called: overtime, OT, overtime wages, extra hours pay
In plain English
If someone stays past the end of their shift because the work needed it, those extra hours are paid on their own, at a higher rate than ordinary hours.
How it works in detail
Which law fixes the normal hours depends on the establishment. A factory sits under the Factories Act, 1948, a shop or commercial establishment under the state Shops and Establishments Act, and wage payment under the Code on Wages, 2019. Each fixes the ordinary working hours, a multiple of the ordinary wage for hours beyond them, and a ceiling on overtime hours. Those figures are revised and differ by state, so confirm the current ones with your consultant before you price a long week.
The disputes are about which hours were authorised. A supervisor who asks four packers to stay back on a dispatch night should record that request the same evening, against names and hours. Without it, a worker who stayed on by choice and a worker who was asked to stay look identical in the register a month later.
A worked example
The setup
Suppose Salim is a packing hand on INR 16,750 a month, and his employer's written policy pays authorised extra hours at INR 95 an hour. In June he works 14.
The calculation
14 hours x INR 95 = INR 1,330 of overtime. Added to the month, INR 16,750 + INR 1,330 = INR 18,080 gross. The INR 95 is the employer's own policy rate used for illustration here, and no rate in this example comes from any act.The result
Salim is paid INR 18,080 for June. His slip shows the wage and the overtime on separate lines, with the 14 hours printed against the overtime line.
Common mistakes
- Folding overtime into the salary as a round monthly allowance. The hours stop being visible, and neither side can check the figure when a long month is questioned.
- Pricing an overtime hour off whichever base makes the bill smaller that month. Fix the base your policy works from, put it in writing, and apply it to every worker.
- Treating every late departure as overtime. Only authorised hours count, and the name of the person who authorised them belongs in the record on the day the work happens.
How VTClock handles it
VTClock records check-in and check-out times and shows them on the admin desk. VTClock does not count overtime hours or apply an overtime rate to them.
Frequently asked questions
What rate am I required to pay for overtime?
The applicable act sets a multiple of the ordinary wage rate, and which act applies depends on whether you run a factory, a shop or another kind of establishment, and in which state. The multiple, the base it applies to and the cap on hours are all revised from time to time, so ask your labour consultant to confirm the current position for your establishment. A policy that pays more than the statutory floor is fine.
Which part of the wage does an overtime hour get priced from?
That depends on the act covering your establishment and on what your own policy says. Some employers work from the full ordinary wage for the job, some from a narrower figure, and the two give noticeably different bills over a busy season. Settle the base once, write it into the appointment letter or the standing policy, and use the same base for every worker rather than deciding it month by month.
Do salaried staff on a fixed monthly pay get overtime?
It depends on the category of employment and the act that covers them. Many establishments treat supervisory and managerial staff as outside overtime and give them time off instead, while workers covered by the applicable act are entitled to it regardless of whether pay is monthly or daily. Get your consultant to tell you which of your roles fall inside the coverage, then say so in each appointment letter.
How should a small business record who approved the extra hours?
Keep it simple and same-day. A dated line naming the worker, the hours asked for and the person who asked is enough, whether it lives in a register, a notebook at the dispatch desk or a message the supervisor sends. What matters is that it is created on the night the work happens. A list assembled at the end of the month from memory will be argued over, and the argument usually lands on payday.
Related terms
- Overnight shiftAn overnight shift is a shift that begins on one calendar date and ends on the next, such as 9:00 pm to 6:00 am.
- Daily wageA daily wage is an amount fixed for one day of work and paid for each day the worker actually attends.
- Gross salaryGross salary is the total of everything an employee earns for a month before a single deduction is taken off: the fixed structure of basic pay and allowances, plus whatever was...
- Payable daysPayable days are the number of days a monthly salary is spread across, and the number of days in a given month the employee is actually paid for.
- Weekly offA weekly off is the rest day in each week on which an employee is not required to work.
- Salary slipA salary slip is the statement an employer gives an employee for one wage period, setting out what was earned, what was deducted and what was paid.
Modules that touch this
- AttendanceGeofenced check-in and check-out near assigned offices, with shift grace, late marks and overnight shifts handled for you.
- Daily wagesPay wage-based staff per day worked, straight from the attendance record. Built for crews and site work.
- Salary slipsBranded, printable slips with earnings, an attendance summary and advance recovery. Staff see the same figures you print.
See how VTClock handles overtime pay
Tell us how your team is paid and where attendance is recorded today. We will show you what the module does with it.