The extra time or the time that you have spent in the office apart from the work hours is the overtime. So, the hours that an employee has been in the office for more than the scheduled or fixed working hours is known as overtime. This concurrently impacts the remuneration of the employee. The overtime rate may vary. However, it is calculated as time and a half and double time. If an employee is working for more than 48 hours in a week or more than 9 hours in a day, he is doing overtime and must be paid for the same.
In this glossary, we will be looking at the following to understand more about overtime.
- Is there a formula for calculating overtime?
- What is overtime pay?
- What are overtime wages?
- What is the overtime policy?
- How can HROne help?
Let’s look at them one after the other.
What is overtime pay?
Overtime pay is given to employees who worked extra hours to complete an urgent task or any other reason whatsoever. The employees must check the company overtime policy before making raising a request. Mostly, the company doesn’t pay if you have worked for 1-2 hours extra. However, if you have exceeded the 48-hour window for the week (or as mentioned in the policy), you might claim overtime pay.
Is there a formula for calculating overtime?
Yes, to calculate overtime in India, here is the formula that is used is
Hourly pay rate x 1.5 x overtime hours
You can also divide the minimum wage rate by 26 (if it is 6 days) to know the salary for 8-9 hours of the day.
Now, you can divide the wages by eight to find the wages for one day. Post that, you can multiply one hour OT amount with overtime hours by 2 to get the overtime amount.
What are overtime wages?
Overtime wages are calculated for the workers who work on an hourly basis with the company. For instance, labor working for a manufacturing company. If they are working more than the hours they are paid for, they are given ‘overtime wages’ for the extra work. As per the law, it is usually paid twice the ordinary payment rate.
What is the overtime policy?
Overtime policy is a formal document that mentions everything related to the company’s overtime. It begins by stating the policy’s purpose and then saying the work hours and when you would be eligible to claim overtime. After that, depending on whether you are using payroll management software, the approval flow would be mentioned accordingly. The company might also mention the overtime payment limit and more.
Can salaried employees claim overtime pay?
Yes, salaried employees can claim overtime pay. First, however, they must check their policy or get in touch with HR to know if the company has defined no-of-hours overtime can be claimed for or the number of extra hours beyond which employees can claim overtime.
How can HROne help?
HROne can automate the entire overtime calculation process with its attendance & payroll management software. By answering a few questions, you can set the overtime policy as per your ongoing policy or update them as per the best practices suggested in HROne.
Employees can read about the policy in the HROne HR handbook, and then they can raise overtime payment requests to trigger the approval flow set by you. Once approved, at the time of payroll processing, our payroll software adds it to the employee’s salary for the month.