Photo by Mario Gogh on Unsplash
The silent struggle of countless Indian workers extends well beyond the standard eight or nine-hour workday. From bank employees working tirelessly during demonetization without extra compensation to IT professionals clocking 12-hour shifts as routine practice, overtime work has become normalised in India's professional landscape, often without proper remuneration or legal safeguards.
Legal Framework, and is it only good on Paper?
India's overtime regulations rest on a robust legal foundation dating back to the colonial-era Factories Act of 1881, which has evolved into today's comprehensive labour law framework. The cornerstone legislation and the Factories Act of 1948 establish clear boundaries where workers should not exceed 48 hours per week or nine hours per day. Any work beyond these limits qualifies as overtime and must be compensated at double the regular wage rate.
This principle extends across multiple legislative instruments. The Minimum Wages Act of 1948 reinforces that work beyond prescribed hours deserves a premium payment. State-specific Shops and Establishments Acts govern commercial establishments, offices, and retail spaces with similar protections, typically limiting work to eight or nine hours daily and 48 hours weekly. The Contract Labour Act of 1970 ensures that even contract workers receive equivalent protection against exploitative working hours.
The law's intent is unmistakable, which is to protect workers from exhaustion, ensure fair compensation for extra effort, and maintain a healthy work-life balance. Employees must receive at least one full weekly holiday, a 30-minute rest break after five continuous hours of work, and double wages for overtime. Penalties for violations include imprisonment up to two years and fines reaching one lakh rupees, with additional daily fines for continued violations.
The Calculation Conundrum
Understanding how overtime pay should be calculated reveals both the law's precision and its practical challenges. For salaried employees, overtime compensation considers basic pay plus dearness allowance and risk allowance, notably excluding bonuses and incentives. The formula divides these components by total monthly working days and maximum daily hours, then multiplies by two and the number of overtime hours worked.
Consider an employee earning 600,000 rupees annually with a monthly dearness allowance of 5,000 rupees and a risk allowance of 2,000 rupees. Working five overtime hours in a 30-day month with eight-hour workdays yields additional compensation of 2,375 rupees. While this calculation appears straightforward on paper, its implementation across India's diverse workplace landscape proves considerably more complex.
Hourly wage workers face a simpler calculation: their basic hourly rate multiplied by two for each overtime hour. Yet even this straightforward approach encounters obstacles when employers fail to maintain accurate time records or deliberately misclassify employees to avoid overtime obligations.
State-by-State Variations: A Patchwork of Protection
India's federal structure creates significant variation in overtime regulations across states, transforming workplace compliance into a geographic puzzle. While the 48-hour weekly limit remains largely consistent, daily overtime caps, quarterly overtime limits, and compensation rates differ substantially.
Telangana's July 2025 reforms exemplify this state-level innovation or, depending on one's perspective, dilution of worker protections. The state now permits 10-hour workdays in commercial establishments while maintaining the 48-hour weekly cap, with overtime compensation triggering only after 48 weekly hours rather than nine daily hours. The quarterly overtime cap stands at 144 hours.
Tamil Nadu adopted a different approach in April 2023, introducing optional four-day workweeks for select factories, particularly in export sectors like electronics manufacturing. These establishments can schedule 12-hour shifts provided weekly hours don't exceed 48 and workers provide explicit consent.
Andhra Pradesh extended overtime exemptions for IT and ITeS companies in March 2025, enabling 24×7 operations with digital recordkeeping and provisions for women working night shifts, contingent on employer-provided safety measures and transportation.
Meanwhile, states like Rajasthan stand out by mandating only one-and-a-half times the ordinary wage rate for overtime lower than the standard double-rate requirement. Bihar caps annual overtime at 150 hours, while West Bengal limits it to 120 hours annually. Gujarat and Maharashtra allow 125 hours per quarter, contrasting sharply with stricter states limiting overtime to 50 hours quarterly. This makeshift creates competitive dynamics where businesses settle toward states with more flexible overtime rules, potentially creating a regulatory race to the bottom that undermines worker protections.
Technology as a Potential Solution
Automated time-tracking systems present promising solutions for accurate overtime calculation and payment. These digital platforms can capture work hours precisely, integrate with payroll systems, and generate transparent records protecting both employers and employees. By reducing manual errors and providing clear documentation, technology could help bridge the enforcement gap.
However, technology alone cannot solve cultural and systemic issues. If employers resist implementing such systems or employees remain unaware of their rights, even the most sophisticated tracking mechanisms will fail to ensure fair overtime compensation.
Looking Forward: the Reform and Reality
India's labour code consolidation attempts to streamline and modernise working hour regulations, introducing flexibility provisions like four-day workweeks with longer daily hours while reaffirming overtime rights. These codes aim for uniformity across industries and establishments, potentially reducing the state-by-state variations that currently complicate compliance.
Yet modernisation must balance flexibility with protection. Longer daily work hours even with weekly caps raise concerns about worker health, safety, and work-life balance. Allowing women to work night shifts represents progress toward gender equality in employment, but only if accompanied by robust safety measures and voluntary consent.
The fundamental question remains that how can India ensure its strong legal protections translate into workplace reality? This requires multi-pronged action, regular labour department inspections, stronger penalties for violations, simplified complaint mechanisms, worker education about legal rights, and cultural shifts recognising that overtime compensation isn't a favour but a legal entitlement.
India stands at a crossroads regarding overtime regulations. The legal framework exists to protect workers from exploitation and ensure fair compensation. The calculations are clear, the penalties substantial, and the intent unambiguous. Yet the gap between law and practice remains unconscionably wide, particularly in the private sector and emerging industries.
Closing this gap demands more than legislative reform. It requires enforcement commitment from regulatory authorities, accountability from employers, and empowerment of workers to assert their rights without fear. Technology offers tools for transparency, but cultural change remains essential by recognising that protecting workers from excessive hours and ensuring fair overtime payment isn't anti-business sentiment but rather the foundation of sustainable, ethical workplace practices.
As India's economy continues evolving and work patterns transform, overtime regulations must adapt while maintaining core protections. The challenge lies not in crafting better laws but in ensuring existing protections reach the millions of Indian workers who deserve dignity, fair compensation, and respect for their time beyond the standard workday. Only when legal frameworks translate into lived reality can India claim to truly protect its workforce.
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