OVERTIME payment as per the new labour codes

OVERTIME payment as per the new labour codes

Blogs
January 12, 2026

Wages & Working Hours • Overtime under New Labour Codes (2025)

Overtime Payment as per the New Labour Codes

With the latest push towards implementation of India’s four labour codes in 2025, organisations must revisit and formalise their overtime policies—especially in worker-heavy sectors where inconsistent governance and overtime practices have historically existed, including the bidi and cigar workforce.

Why overtime matters now

Overtime is increasingly treated as a measurable indicator of working-hour discipline, payroll accuracy, and employee welfare.

What teams must align

HR, payroll, and regulatory teams must align policy language with approval workflows, calculations, payslips, and records.

What changes in mindset

The focus shifts from “whether overtime is paid” to “how overtime is approved, calculated, and recorded.”

What are the key takeaways

Quick policy signals based on working hours and wage governance

Key takeaways listed in the narrative

Employers cannot pay any employee less than the minimum wage.

Fixed working hours and guardrails to prevent overwork.

Wage slips should reflect extra hours and related payouts.

Wage slips for normal hours and formal appointment letters as baseline documentation.

Employee consent is required for overtime work (where applicable in policy/process).

Why this is urgent for organisations

Many sectors historically treated overtime as informal, irregular, or untracked. The evolving framework increases scrutiny around measurable hours, approvals, payroll computations, and record integrity—raising both compliance and employee experience expectations.

Policy outcome target

A single overtime policy that is clear, auditable, and operationally workable across sites and worker categories.

How overtime has been framed over time

From sector rules to a more formalised compliance approach

Legacy sector framing (as stated)

The narrative references the Bidi and Cigar Workers Act (1966) setting broad parameters such as a working day extending up to nine hours, 48 hours per week, and annual leave eligibility after 240 days of work in a calendar year.

Labour codes focus (as stated)

The narrative highlights that labour codes published in 2020, with a focus on occupational safety, health, and working conditions, supported an expanded system of wage protection, social security coverage, and workplace safeguards—driving greater formalisation.

In the narrative context of the wages code (2025), overtime rules are presented as further refined—bringing structured wage floors, clearer overtime entitlement expectations, and time-bound wage payment discipline.

Overtime rules under New Labour Codes (2025) as described

The four building blocks employers should translate into policy

1. Floor wages

The narrative states that the Central Government will set floor wages based on minimum living needs (food, clothing, necessities) and revise these periodically. A uniform floor wage is positioned to reduce wage disparity-driven labour migration.

2. Overtime wages

Employees may work within standard limits (e.g., 48 hours per week as stated). Overtime is described as payable at a rate not less than twice regular wages for work beyond standard working hours.

3. Time limit for wage payment

The narrative positions timely wage disbursement as a legal safeguard and notes that wages must be paid within prescribed timelines. It further states workers become eligible for bonus after completing 30 days of work in a year.

4. Prior overtime consent and approval discipline

The narrative recommends written approval before assigning extra hours, with overtime applying only when additional hours are assigned or approved by the employer. Staying back voluntarily without approval is stated as not automatically qualifying as overtime.

Practical policy translation

Define eligibility, approval workflow, calculation method, rounding approach (where applicable), payslip treatment, and record retention. Ensure site-level managers cannot bypass controls.

Earlier laws governing overtime

The legacy legal framework referenced in practice

Factories Act, 1948

Applicable to factories and manufacturing units. The narrative notes 9 hours per day and 48 hours per week, with overtime beyond these limits compensated at twice ordinary wages.

Minimum Wages Act, 1948

Earlier applied to scheduled employments. Rule 25 of the Minimum Wages Rules, 1950 is referenced: agricultural work at 1.5 times, other scheduled employment at twice ordinary pay.

State Shops & Establishments Acts

Applicable to shops, offices, and establishments. Working-hour limits and overtime restrictions vary by state.

Employment contracts and policies

Employer policies may provide better benefits but cannot provide less than legally required minima.

How states will regulate overtime under the wages code

State variations, with baseline consistency

The narrative explains that labour is a concurrent subject, so states retain power to specify working-hour limits, overtime caps, and industry-specific exemptions, within the broader framework of the labour codes.

State-level levers typically include

Daily and weekly working-hour limits, overtime hour caps, and industry-specific relaxation provisions.

The narrative references Section 27 as requiring baseline adherence across states and cites Rule 62 describing overtime wages at twice the rate beyond eight hours per day (for daily wager) or forty-eight hours per week, with wage-period payment and rounding rules.

Rounding and wage basis (as quoted in the narrative)

Fractions of an hour between 15 and 30 minutes are counted as 30 minutes; above 30 minutes are counted as an hour. For monthly-paid workers, daily wages are stated as 1/26th of monthly wages.

How to calculate overtime pay

Two-step computation (as illustrated)

Step 1: Regular hourly wage

For salaried employees:

                Regular Hourly Wage = Monthly Salary / (Working Days in a Month × Working Hours per Day)
              

Example: ₹30,000 salary, 22 working days, 8 hours/day Regular Hourly Wage = ₹30,000 / (22 × 8) = ₹170.45

Step 2: Overtime pay

Overtime pay is illustrated at twice the regular hourly rate:

                Overtime Pay = Overtime Hours × Regular Hourly Wage × 2
              

Example: 5 overtime hours Overtime Pay = 5 × ₹170.45 × 2 = ₹1,704.50

State-wise overtime policy snapshot

Selected large states and regions (as listed)

State/Region	Normal working hours	Maximum overtime hours	Overtime wage rate
Assam	8 hours/day; 48 hours/week	2 hours/day; 50 hours/quarter	Twice ordinary rate
Bihar	9 hours/day; 48 hours/week	1 hour/day and 54 hours/week; aggregate OT not exceeding 150 hours/year	Twice ordinary rate
Delhi	9 hours/day; 48 hours/week	6 hours/week; 150 hours/year	Twice normal remuneration (hourly)
Gujarat	9 hours/day; 48 hours/week	125 hours in 3 months	Twice ordinary rate
Haryana	9 hours/day; 48 hours/week	50 hours/quarter	Twice normal wages (hourly)
Karnataka	Total hours incl. OT not exceeding 10 hours/day (except stock-checking/account prep); 48 hours/week	50 hours/quarter	Twice normal wages
Kerala	8 hours/day; 48 hours/week	50 hours/quarter	Twice ordinary rate
Madhya Pradesh	48 hours/week; 9 hours/day (shop); 10 hours/day (commercial)	6 hours/week	Twice ordinary rate
Maharashtra	Spread-over not exceeding 10.5 hours/day; urgent work up to 12 hours/day; 48 hours/week	125 hours in 3 months	Twice ordinary rate
Odisha	9 hours/day; 48 hours/week	1 hour/day; 50 hours/quarter	Twice ordinary rate
Punjab	9 hours/day; 48 hours/week	50 hours/quarter	Twice normal wages (hourly)
Rajasthan	9 hours/day; 48 hours/week	1 hour/day; 50 hours/quarter	One and a half times
Tamil Nadu	8 hours/day; 48 hours/week	6 hours/week	Twice ordinary rate
Telangana	10 hours/day; 48 hours/week	48 hours/week; 144 hours/quarter	Twice normal wages
Uttar Pradesh	8 hours/day	2 hours/day; 50 hours/quarter	Twice ordinary rate
West Bengal	8 hours/day; 48 hours/week	1.5 hours/day; 120 hours/year	Twice ordinary rate

Note: The above table is reproduced as provided in the content and represents a snapshot. State rules and notifications should be validated for current applicability and sector-specific exemptions.

Conclusion

Overtime is now a governance metric, not just a payroll line item

The wage code narrative positions overtime as protection for workers who earlier worked extra hours without compensation. However, state-level variation and sector-specific rules may impact caps and operational restrictions, making it essential for companies to maintain policy clarity and audit-ready records.

In 2025 and into 2026, overtime is no longer treated as an occasional adjustment. Labour authorities increasingly view it as an indicator of how well an organisation manages working hours, approvals, payroll calculations, and employee welfare.

For HR, regulatory, and payroll teams, the focus has moved from “whether overtime is paid” to “how overtime is approved, calculated, and recorded.”

OVERTIME payment as per the new labour codes