How overtime pay is calculated under the Codes

At twice the rate of wages, for every hour worked beyond eight in a day or forty-eight in a week, counted on whichever basis gives the worker more. Section 27 of the OSH Code 2020 sets the rule; the Tamil Nadu draft and Central rules fix the daily wage at one twenty-sixth of the monthly, round part-hours up, and require payment with each wage period. One question is still open: which components form the rate.

When an hour becomes overtime

After eight hours in the day or forty-eight in the week, and the worker gets the better of the two counts. Section 27 pays overtime for work beyond the hours the appropriate government prescribes "in any day or in any week", and says the period "shall be calculated on a daily basis or weekly basis, whichever is more favourable to such worker". It also makes overtime subject to the worker's consent. Rule 30(1) of Tamil Nadu's 2022 draft OSH rules sets the triggers at more than eight hours in any day or more than forty-eight in any week.

The week above totals exactly forty-eight hours, so a weekly count finds no overtime; the daily count finds four. Section 27 requires the four. The Central rules word this differently: rule 69(1) of the OSH (Central) Rules 2026 gives overtime beyond eight hours a day to a "daily wager" and beyond forty-eight a week to a worker "other than daily wager", which read alone would leave a monthly-rated worker with nothing for this week. The Code's "whichever is more favourable" sits above the rule, and a payroll that applies only the weekly test to monthly-rated staff should have that checked by counsel [VERIFY: any Ministry clarification on r.69(1)].

Two further timing rules. For a shift that runs past midnight, section 28 counts the hours after midnight in the previous day, so a 10 p.m. to 8 a.m. shift is one ten-hour day, not two short ones. And the Ministry of Labour and Employment's Additional FAQs of 16 March 2026 confirm that where a state allows a twelve-hour day, hours beyond eight are still overtime at twice the rate (Q24).

From the monthly wage to the hourly rate

Divide by twenty-six for the day, then by eight for the hour. Both the Tamil Nadu draft (r.30(3)) and the Central rules (r.69(3)) say that for a worker paid by the month "the daily wages shall be 1/26th of his monthly wages", and for any other worker the daily wages or earnings actually paid. Neither states the hourly divisor; eight, the length of the normal working day under section 25, is the natural one [VERIFY: the hourly divisor used in the rules' prescribed registers]. A piece-rated worker's daily earnings take the place of the daily wage.

Part-hours are rounded up, not down. Under both sets of rules, a fraction of an hour between fifteen and thirty minutes counts as thirty minutes, and more than thirty minutes counts as a full hour (TN draft r.30(2); Central r.69(2)). The rules say nothing about fractions under fifteen minutes. A worker who stays one hour and twenty minutes past the shift is paid for an hour and a half; one hour and forty minutes is paid as two hours.

What the rate is twice of

Wages as the Code defines them, and the Code's own definition leaves a choice. Section 2(1)(zzj) of the OSH Code defines wages as basic pay, dearness allowance and retaining allowance, and excludes items including conveyance allowance (d), house rent allowance (f) and overtime allowance (h). Its first proviso adds back any exclusions above half of total remuneration. Its second proviso then says that "for the purpose of equal wages to all genders and for the purpose of payment of wages", the items in clauses (d), (f), (g) and (h) "shall be taken for computation of wages".

Read narrowly, overtime runs on basic, dearness allowance and retaining allowance, plus any add-back. Read with the second proviso, conveyance and house rent allowance join the base when wages are being paid, and overtime is a payment of wages. The two give different figures on the same payslip. Take a monthly pay of ₹15,600, a round figure chosen to divide cleanly and not a rate this site quotes: ₹12,000 basic and dearness allowance, ₹2,400 house rent allowance and ₹1,200 conveyance.

Over a quarter, the gap adds up. At the Tamil Nadu draft cap of 125 overtime hours a quarter it comes to about ₹4,327 per worker; at the Central cap of 144, about ₹4,985. Which reading applies is a question for the site's and the contractor's counsel, and our article on the 50% wage rule sets out how the add-back works. Until it is settled, the defensible course is to pay on the wider base or to record why the narrower one was used.

A month worked through

Take the same worker through a month with overtime on thirteen days: ten days with two hours each, and three days with one hour and twenty minutes each. The ten days give twenty hours. Each one hour and twenty minutes rounds to an hour and a half, so the three days give four and a half. Total overtime is 24.5 hours, well inside both quarterly caps.

The overtime is paid at the end of the wage period in which it was worked (TN draft r.30(1); Central r.69(1)), not held back to a later month. For a monthly-rated worker, the Code on Wages then gives the employer until the seventh day of the following month to pay that wage period's wages (s.17(1)). The register of wages, overtime and deductions records the hours, the rate and the amount for each worker.

Who pays, and who is covered

The contractor pays its crew's overtime, and the site carries the fallback. The OSH Code counts the contractor as an employer, and section 55(3) makes the principal employer liable for wages a contractor fails to pay. On coverage, the OSH Code's overtime section speaks of a "worker", which leaves out managerial staff and supervisors drawing more than ₹18,000 a month (s.2(1)(zzl)). Section 14 of the Code on Wages separately requires overtime at not less than twice the normal rate for any employee whose minimum rate of wages is fixed under that Code, and the Ministry's March 2026 FAQs say such an employee is eligible for overtime (Q5).

• Check the count, not just the rate. A contractor's payroll that tests only the weekly forty-eight will underpay any crew on uneven shifts.
• Check the rounding. Twenty minutes past the shift is half an hour's overtime, not nothing.
• Check the base. Ask which components the contractor's overtime rate is built on, and whether that choice has been checked.
• Check the cap. Overtime hours per worker per quarter against 125 under the Tamil Nadu draft; a worker near the cap should not be rostered for more.

Sources

• Occupational Safety, Health and Working Conditions Code, 2020 (Act 37 of 2020), Gazette text hosted by DGFASLI — s.2(1)(zzj) (wages; exclusions; first and second provisos), s.2(1)(zzl) (worker), s.25 (eight hours a day), s.27 (overtime at twice the rate; daily or weekly, whichever is more favourable; consent; total hours prescribed), s.28 (shifts past midnight), s.55(3) (principal employer's liability for unpaid wages). Opened and read.
• Occupational Safety, Health and Working Conditions (Tamil Nadu) Rules, 2022 (draft), G.O. Ms. No. 38, 11 April 2022 — r.30 (triggers; payment at the end of each wage period; rounding; daily wage as 1/26 of monthly; 125 hours a quarter). Opened and read. Draft only [VERIFY: whether Tamil Nadu's final OSH rules keep these figures].
• Occupational Safety, Health and Working Conditions (Central) Rules, 2026, G.S.R. 345(E) dated 8 May 2026 — r.69 (daily wager and other worker triggers; rounding; 1/26; 144 hours a quarter). Opened and read from a mirrored copy of the Gazette [VERIFY: against the e-Gazette original].
• The Code on Wages, 2019 (Act 29 of 2019), Gazette text hosted by the Ministry of Labour and Employment — s.14 (overtime at not less than twice the normal rate for employees on fixed minimum rates), s.17(1) (time limits for payment). Opened and read.
• Ministry of Labour and Employment, Additional FAQs on Labour Codes (as on 16 March 2026) — Q5 (eligibility for overtime), Q24 (overtime beyond eight hours where twelve is the daily maximum). Opened and read.