The overtime calculation formula is overtime hours × hourly rate × the overtime multiple. For a monthly-paid employee, the hourly rate is the monthly wage divided by the days you count the month as, then divided by the hours in a normal working day. Under section 14 of the Code on Wages, 2019, in force since 21 November 2025, work beyond the normal working day is paid at not less than twice the normal rate of wages, so the multiple is at least 2. Take a salesman on ₹15,000 a month, counted on 26 days of 8 hours. His day rate is ₹576.92 and his hourly rate is ₹72.12. Each overtime hour is worth at least ₹144.23, so 10 hours of overtime in a month add ₹1,442.31 to his pay. Normal working hours and overtime limits also depend on your state, so check those with your CA. The sections below cover the steps, weekly-off work, and late and early fines.
Key Highlights
- Overtime pay = overtime hours × (monthly wage ÷ days counted ÷ hours a day) × 2 or more; on ₹15,000, 26 days and 8 hours, that is ₹144.23 an hour.
- Section 14 of the Code on Wages, 2019 sets overtime at not less than twice the normal rate of wages for work beyond the normal working day.
- Fines under section 19 of the Code on Wages are allowed only for acts listed in an approved notice, after the person is heard, and may not total more than 3% of the wages for that wage period.
In This Article
- The formula, step by step
- What the law says about the twice rate
- Overtime on the weekly off
- Late and early fines
- How the app works out overtime
- Frequently Asked Questions
The formula, step by step
| Step | Working | On ₹15,000, 26 days, 8 hours |
|---|---|---|
| 1. Day rate | Monthly wage ÷ days counted | ₹15,000 ÷ 26 = ₹576.92 |
| 2. Hourly rate | Day rate ÷ hours in a normal day | ₹576.92 ÷ 8 = ₹72.12 |
| 3. Overtime rate | Hourly rate × 2 | ₹144.23 |
| 4. Overtime pay | Overtime hours × overtime rate | 10 hours × ₹144.23 = ₹1,442.31 |
Work the figures through without rounding until the last step, then round to the paisa. Rounding the hourly rate first can move the month's total by a few rupees.
The days you count the month as change the answer. On a 30-day basis the same salary gives ₹62.50 an hour and ₹125 an overtime hour, so 10 hours come to ₹1,250. Our guide to per day salary calculation compares the three bases. Whatever you choose, use the same basis for absent days and overtime so the payslip adds up.
For a daily-wage worker, start from the day rate directly. At ₹550 for 8 hours, the hourly rate is ₹68.75 and the overtime rate ₹137.50. Our daily wage salary app page shows how daily and piece-rate pay is worked out alongside overtime.
What the law says about the twice rate
Four labour codes came into force on 21 November 2025, replacing 29 central labour laws. The Code on Wages, 2019 is the one that sets wages and overtime pay. Section 14 says that where an employee works on any day beyond the hours of a normal working day, the employer pays for every hour, or part of an hour, at an overtime rate not less than twice the normal rate of wages.
Three practical points follow:
- Twice is the floor. You may pay more, and some businesses pay a higher rate for Sundays and holidays.
- "Normal rate of wages" is a defined term. The Code defines what counts as wages, and it may not be the same as the basic pay on your appointment letter. Ask your CA which parts of the salary go into the hourly rate.
- The normal working day is fixed by government rules. Section 13 lets the government fix the hours of a normal working day, and states set their own hours, rest intervals and overtime limits for shops and establishments. We have not listed hour limits here because they vary by state and by type of work.
Overtime on the weekly off
Work on the weekly off is often paid at a higher rate than weekday overtime, or as a full extra day plus overtime. Decide the rule, write it down and tell staff before Diwali or the year-end rush, when Sunday work is common.
| Case | Hours | Rate | Pay |
|---|---|---|---|
| Weekday overtime | 3 | ₹144.23 | ₹432.69 |
| Sunday work at the same overtime rate | 8 | ₹144.23 | ₹1,153.85 |
In this example the business pays Sunday hours at the overtime rate. Other businesses pay a full day's wage plus overtime for anything beyond the normal hours. Both are common; what matters is that it is written down and applied the same way to everyone.
Late and early fines
Owners often cut a fixed amount for coming in late or leaving early. Under section 19 of the Code on Wages, a fine can be imposed only for acts and omissions listed in a notice the employer has displayed with the approval of the government or the prescribed authority, only after the employee has had a chance to explain, and the fines in one wage period may not exceed 3% of the wages for that period. On a ₹15,000 salary that is ₹450 in a month at most. Fines must be recorded in a register and used only for the staff's benefit.
Cutting pay for the part of the day someone was actually absent is a different matter. Section 20 allows a deduction for absence in proportion to the time absent. A late arrival handled as a short absence follows that rule, and one handled as a fine follows section 19. Before you set late fines, ask your CA how they should be framed for your state.
How the app works out overtime
In Takkada's Staff and Payroll add-on you add in and out times, and overtime is worked out from them. You set the overtime rate, including a higher rate for work on the weekly off, and late and early fines, once in settings. Every salary for the month is worked out from attendance, overtime, fines, bonus, advances and deductions, with the working shown on each payslip line. That gives you overtime worked out from in and out times without a calculator at month end.
For the wider checklist, read what to look for in payroll for a Tally business.
Frequently Asked Questions
Q: What is the formula for overtime calculation?
A: Overtime pay = overtime hours × hourly rate × the overtime multiple, where the hourly rate is the monthly wage ÷ days counted ÷ hours in a normal day. On ₹15,000 with 26 days and 8 hours, the hourly rate is ₹72.12 and twice that is ₹144.23. Ten overtime hours come to ₹1,442.31.
Q: Is overtime paid at double rate in India?
A: Yes. Section 14 of the Code on Wages, 2019, in force since 21 November 2025, sets the overtime rate at not less than twice the normal rate of wages for work beyond the normal working day. Double is the minimum, and an employer can pay more.
Q: How do I work out the hourly rate for a monthly salary?
A: Divide the monthly wage by the days you count the month as (26, 30 or the calendar days), then by the hours in the normal working day. ₹15,000 ÷ 26 ÷ 8 = ₹72.12 an hour. Ask your CA which parts of the salary count as wages for this, because the Code on Wages has its own definition.
Q: Can a late fine be cut from salary?
A: Only within the rules on fines in section 19 of the Code on Wages: the act must be listed in an approved notice, the employee must be heard first, and fines may not exceed 3% of that period's wages, ₹450 on ₹15,000. A deduction for time actually absent follows section 20 instead. Check with your CA before you start cutting late fines.
Takkada's Staff and Payroll add-on works out overtime from in and out times and shows the working on every payslip. It is switched on for each company separately; message us on WhatsApp to see it on your own team.