Free payroll tool
Overtime calculator: hourly rate and overtime pay
Turn monthly wages into an ordinary daily and hourly rate, then see the overtime rate and the overtime pay for the hours worked.
How overtime pay is calculated
Overtime is paid at a multiple of the ordinary rate of wages. So the first job is to turn a monthly salary into an hourly figure. This calculator divides monthly wages by working days to get a daily rate, then by normal daily hours to get an hourly rate.
Monthly wages for this purpose means basic pay plus allowances, including dearness allowance. Bonus and overtime already paid are left out.
Worked example
A factory worker earns ₹26,000 a month, works 26 days of 8 hours and does 10 hours of overtime in the month at twice the ordinary rate.
- Ordinary daily rate: ₹26,000 ÷ 26 = ₹1,000.
- Ordinary hourly rate: ₹1,000 ÷ 8 = ₹125.
- Overtime rate: ₹125 × 2 = ₹250 an hour.
- Overtime pay: 10 hours × ₹250 = ₹2,500.
With a 30-day divisor instead, the hourly rate would fall to about ₹108.33 and overtime pay to ₹2,167. The divisor you choose matters.
What the law says
For factories, Section 59 of the Factories Act, 1948 requires overtime at twice the ordinary rate of wages for work beyond 9 hours in a day or 48 hours in a week. The ordinary rate covers basic wages and allowances, but not bonus or overtime.
The Occupational Safety, Health and Working Conditions Code, 2020 and the other labour codes were brought into force from 21 November 2025. The OSH Code works around an 8-hour working day and keeps overtime at twice the ordinary rate. Rules are still being notified by the Centre and the states, so check what applies in your state.
States also set limits on how many overtime hours may be worked, usually per quarter. Shops and commercial establishments fall under state Shops and Establishments Acts, whose overtime rules differ from state to state.
Company policy and practice
The law sets a minimum. Many employers pay overtime by their own policy, and practice varies more than people expect:
- Divisor. Some use 26 working days, others 30 calendar days or the actual days in the month.
- Threshold. Some count overtime after the shift ends, others only after 9 hours in a day or 48 in a week.
- Rate. Staff outside the Factories Act or state rules may get 1× or 1.5× by agreement. Managerial staff are often excluded.
Whatever you choose, write it down and apply it the same way every month. Overtime counts as wages for ESI, so remember it in the ESI calculator too.
Our guide to overtime pay rules in India goes through working-hour limits in more detail. In Swastik Payroll, overtime hours are measured from each employee's assigned shift end time and flow into the monthly salary record; see attendance management.
Overtime calculator FAQs
Is overtime always paid at double the rate?
Twice the ordinary rate is the legal minimum for workers covered by the Factories Act and the OSH Code. Other employees depend on state rules and their employment terms, which may set a different rate.
Should HRA be included in the ordinary rate?
The ordinary rate includes allowances, so HRA and similar cash allowances are generally part of it. Bonus and overtime pay are not. If your policy uses only basic pay, enter that instead and note that it may fall below the legal minimum.
Does overtime attract PF?
No. PF is calculated on basic + DA, and overtime is not part of it. ESI, on the other hand, is due on overtime wages.
What if the employee works on a weekly off or holiday?
That depends on the applicable law and policy. Some employers pay a full extra day, others give a compensatory off. Enter the hours here only if they are treated as overtime.
Results are estimates for planning. Statutory rates, ceilings and tax rules change; check the current notifications or consult your CA before using a figure for payroll or tax filing.
Stop calculating payroll by hand
Swastik Payroll applies these rules to every employee automatically, straight from attendance, and produces payslips and PF/ESIC files.