The Factories Act, 1948
CHAPTER VI: WORKING HOURS OF ADULTS
Section 59: Extra Wages For Overtime
Bare Act
(1) Where a worker works in a factory for more than nine hours in any day or for more than forty-eight hours in any week, he shall, in respect of overtime work, be entitled to wages at the rate of twice his ordinary rate of wages.
(2) For the purposes of sub-section (1), "ordinary rate of wages" means the basic wages plus such allowances, including the cash equivalent of the advantage accruing through the concessional sale to workers of foodgrains and other articles, as the worker is for the time being entitled to, but does not include a bonus and wages for overtime work.
(3) Where any workers in a factory are paid on a piece rate basis, the time rate shall be deemed to be equivalent to the daily average of their full-time earnings for the days on which they actually worked on the same or identical job during the month immediately preceding the calendar month during which the overtime work was done, and such time rates shall be deemed to be ordinary rates of wages of those workers:
Provided that in the case of a worker who has not worked in the immediately preceding calendar month on the same or identical job, the time rate shall be deemed to be equivalent to the daily average of the earning of the worker for the days on which he actually worked in the week in which the overtime work was done.
Explanation - For the purposes of this sub-section in computing the earnings for the days on which the worker actually worked such allowances, including the cash equivalent of the advantage accruing through the concessional sale to workers of foodgrains and other articles, as the worker is for the time being entitled to, shall be included but any bonus or wages for overtime work payable in relation to the period with reference to which the earnings are being computed shall be excluded.
(4) The cash equivalent of the advantage accruing through the concessional sale to a worker of foodgrains and other articles shall be computed as often as may be prescribed on the basis of the maximum quantity of foodgrains and other articles admissible to a standard family.
Explanation 1 - "Standard family" means a family consisting of the worker, his or her spouse and two children below the age of fourteen years requiring in all three adult consumption units.
Explanation 2 - "Adult consumption unit" means the consumption unit of a male above the age of fourteen years; and the consumption unit of a female above the age of fourteen years and that of a child below the age of fourteen years shall be calculated at the rates of 8 and 6 respectively of one adult consumption unit.
(5) The State Government may make rules prescribing:
- (a) the manner in which the cash equivalent of the advantage accruing through the concessional sale to a worker of foodgrains and other articles shall be computed; and
- (b) the registers that shall be maintained in a factory for the purpose of securing compliance with the provisions of this section.
Simplified Act
(1) If a worker at a factory works more than 9 hours in a day or over 48 hours in a week, they should get paid double their normal wage for the extra time worked.
(2) The "normal wage" includes the worker's basic pay and any other benefits they usually get, like discounts on food and other items. It doesn't include any bonus or extra pay for overtime.
(3) Workers who are paid based on how much they produce (piece rate) will have their overtime pay based on an average of what they earned each day over the past month. If they haven't worked on the same job in the past month, it's based on their average daily earnings from the previous week.
The allowances they normally receive are included in this calculation, but bonuses and previous overtime pay are not.
(4) The value of any discounted food or items given to workers is calculated based on the needs of a "standard family" (which is considered to be the worker, their spouse, and two children under 14 years old).
(5) The State Government can create rules on how to figure out the value of these discounts and what kind of records factories need to keep to make sure they're following these overtime pay rules.
Explanation using examples
Imagine a factory worker named Rohan who typically works 8 hours a day for 6 days a week at a basic wage of ₹300 per day. One week, due to an urgent order, Rohan is asked to work 2 extra hours each day. At the end of the week, Rohan has worked a total of 60 hours, which is 12 hours more than the standard 48-hour workweek.
According to Section 59 of The Factories Act, 1948, Rohan is entitled to overtime wages for the additional 12 hours. His overtime wage is calculated at twice his ordinary rate of wages. Rohan's ordinary rate includes his basic wage of ₹300 plus any eligible allowances. Assuming he has no additional allowances, his ordinary rate is ₹300.
For the overtime hours, Rohan should be paid at the rate of ₹600 per hour (twice his ordinary rate). Therefore, for the 12 hours of overtime, Rohan would earn an additional ₹7,200 (12 hours x ₹600 per hour), over and above his regular earnings.
If Rohan was a piece-rate worker, his overtime rate would be calculated based on the average daily earnings of the preceding month for the same job. If Rohan had not worked the previous month or had no identical job to compare, his overtime rate would be based on his average earnings of the week in which he did the overtime work.
