Overtime Pay Rules in India: Double Wages, Caps and Records

If an employee in India works beyond the standard daily or weekly hours, the law requires the employer to pay double the ordinary wage rate for those extra hours, not a flat allowance or a discretionary bonus.

Key facts at a glance

• Overtime must be paid at twice the ordinary rate of wages (basic plus dearness allowance) for hours worked beyond the statutory limit.
• The standard working day is generally capped at 9 hours, and the standard working week at 48 hours, under most state factory and shops laws.
• Quarterly overtime hour caps typically fall in the 50 to 75 hour range depending on the state and the type of establishment.
• Overtime registers and wage records must be maintained and made available to labour inspectors on demand.
• The Code on Wages consolidates overtime provisions but retains the double-wages principle; state-level rules still govern practical implementation as of mid-2026.
• Failing to pay statutory overtime exposes an employer to wage-claim litigation and penalties under the applicable labour law.

Who is entitled to overtime pay

Overtime entitlement generally applies to workers as defined under the Factories Act, Shops and Establishments Acts, or the equivalent state legislation. This typically covers people doing manual, clerical, or supervisory work below a certain pay or authority threshold. Employees in genuine senior management or confidential roles are often excluded, but the exact boundary varies by state, so employers should check their specific state's definition rather than assuming a blanket exemption.

Contract workers and workers employed through a staffing agency are also entitled to overtime pay for hours worked beyond the standard limit, and the principal employer can carry residual liability if the contractor fails to pay correctly.

How overtime pay is calculated

The ordinary rate of wages used as the base for overtime is usually basic pay plus dearness allowance, divided by the number of working hours in a day or month to arrive at an hourly rate. That hourly rate is then doubled for every hour of overtime worked.

Allowances like HRA, conveyance, or performance bonuses are typically excluded from the overtime base calculation, though this can vary by state rule. Employers should document their calculation methodology clearly in the payroll policy so it can be defended in an inspection or dispute.

Hour caps and permissible limits

These caps exist to prevent employers from routinely substituting overtime pay for adequate staffing. Exceeding the cap without the required regulatory permission is itself a violation, independent of whether overtime wages were paid correctly.

Records every employer must maintain

To survive a labour inspection, an employer needs at minimum:

• A register of hours worked, showing normal hours and overtime hours separately for each worker.
• A wage register showing the overtime rate applied and the amount paid.
• Attendance records (biometric, muster roll, or equivalent) that reconcile with the hours register.
• Copies of any regulatory permission obtained for exceeding standard overtime caps.

Missing or inconsistent overtime records are one of the most common findings in labour department inspections, even at otherwise well-run companies.

How the Labour Codes affect overtime

The Code on Wages, 2020 (in force nationally since 21 November 2025) retains the core principle that overtime must be paid at double the ordinary wage rate. What changes is consolidation: overtime, along with minimum wages and bonus, now sits under one central framework instead of being spread across separate wage laws. However, because labour is a concurrent subject, each state must notify its own rules before the Code's detailed provisions are fully operational there. As of mid-2026, most states have not yet fully notified their rules, so employers should continue following their existing state-level overtime rules while tracking their state's Labour Code notification status.

If you are not sure whether your payroll process correctly calculates and records overtime, ComplianceCheck's statutory compliance assessment gives you a clear picture in a few minutes.

Sources

• Ministry of Labour and Employment - labour.gov.in
• Respective state labour department websites
• Employees' Provident Fund Organisation - epfindia.gov.in (for wage-related payroll context)

This guide is general information, not legal advice. Requirements vary by state, sector and headcount - confirm specifics with a compliance professional or the relevant authority.