What is overtime costing you?

Under the OSH Code, overtime in an Indian factory needs the worker's consent and is paid at twice the ordinary rate of wages, and "wages" here means basic pay plus DA, not gross salary. On a ₹16,000 monthly wage, that works out to about ₹154 for every overtime hour. With 40 workers doing 2 hours a day for 300 days, the bill is about ₹37 lakh a year. This calculator shows that figure for your own floor, so you can weigh it against the cost of another shift or the hours being lost inside the normal one.

How the calculator works

The calculator takes four inputs:

• Workers on overtime per day. The average number of workers who stay back on a working day. Use an average over a month, not your busiest day.
• Overtime hours per worker per day. The average hours each of them works beyond the normal day.
• Monthly wage (₹). Enter basic + DA per worker. The Code on Wages definition of "wages" excludes HRA, conveyance and overtime allowance, and adds excluded items back only where they exceed half of total pay (OSH Code, 2020, read with the Code on Wages, 2019 s.2(y)). If your pay structure is mostly basic, gross and basic + DA will be close. If it isn't, use basic + DA.
• Working days a year. The days the plant actually runs overtime, typically 300 for a six-day week minus holidays.

The formulas:

Ordinary hourly rate = monthly wage ÷ 26 ÷ 8
Overtime hourly rate = 2 × ordinary hourly rate
Overtime cost per year = workers × OT hours per worker × OT hourly rate × working days

Why 26 and 8. The OSH (Central) Rules, 2026 take the daily rate of a monthly-paid worker as one twenty-sixth of monthly wages, and trigger overtime after 8 hours a day for daily-rated workers or 48 hours a week for others (r.69, G.S.R. 345(E)). Dividing by 8 gives the hourly rate. Strictly, the Central Rules bind central-sphere establishments. For an ordinary private factory, your state's rules apply, and some states compute the daily rate differently. Use the state method if it differs.

Why 2×. OSH Code s.27 says overtime is paid "at the rate of twice the rate of wages". It is calculated daily or weekly, whichever is more favourable to the worker, and it needs the worker's consent (OSH Code, 2020). The Code on Wages, 2019 s.14 sets the same floor: not less than twice the normal rate.

Worked example (India)

A mid-size engineering or garment unit running overtime to clear a backlog. The inputs are assumptions for illustration, and they are the calculator's defaults.

How ₹16,000 compares with a real minimum wage. In Uttar Pradesh, the skilled minimum from 1 April 2026 is ₹16,868 a month in the Category I districts (Gautam Buddha Nagar and Ghaziabad) and ₹16,025 in Category II districts with a Nagar Nigam (UP interim-relief order No. 374/36-2-2026 of 17 April 2026). So ₹16,000 is roughly a skilled minimum wage in urban UP. Your own state, zone and trade will differ, and the VDA part is revised periodically.

Check the quarterly ceiling before you plan this much overtime. Two hours a day for 300 days is 600 hours a year per worker, or about 150 hours a quarter. The Central Rules use a ceiling of 144 hours of overtime in a quarter (r.69(4) proviso, G.S.R. 345(E)). Your state sets the limit that actually binds your factory, and several states have moved to similar levels. So the pattern in this example sits at or over a typical cap. The same 24,000 hours spread across more workers might stay legal. On the same 40 workers, they might not. Check your state's current notification.

What typical numbers look like

• The legal multiplier is fixed: 2×. That is the one number here that comes from statute (OSH Code s.27). Any agreement or standing practice that pays less than twice the ordinary rate of wages is below the legal floor.
• Overtime rounding. Under the Central Rules, an overtime period of 15 to 30 minutes counts as half an hour, and more than 30 minutes counts as a full hour (r.69). Many short stay-backs add up to more paid hours than the clock suggests.
• How much overtime Indian factories run. We found no credible published benchmark of overtime hours or overtime spend for mid-size Indian factories by sector. Compare against your own payroll history rather than an industry figure.

What this number does not tell you

• Whether the overtime was needed. Overtime often pays for hours lost earlier in the normal shift: late starts, long changeovers, waiting for material, breakdowns. If the same output could have come out of the normal 8 hours, part of this bill is the price of those losses. The changeover time cost calculator and the OEE calculator help size them.
• The full cost of an overtime hour. The calculator counts only the statutory overtime wage. It leaves out extra power, canteen and transport (including night transport where women work late, which the rules require), supervision, and the quality and safety effect of long days.
• Whether a second or third shift would be cheaper. Overtime pays 2× the ordinary rate. A new shift pays 1× plus hiring, training and supervision. At sustained volumes the shift often wins. See Second & Third Shift in India.
• Anything about individual workers. The inputs are averages for the floor. If you use attendance systems or cameras to see when lines actually start and stop, report it at line and shift level, and give workers the DPDP notice for workplace CCTV.
• Your state's exact rules. Spread-over, rest intervals and the quarterly cap are set by the state. Where your state hasn't finalised its rules under the Codes, its existing factory rules broadly continue during the transition.

Related guides

• Second & Third Shift in India: From Compliance Cost to Revenue
• Running a Third Shift in India: The ₹ Case for Textile and Auto Plants
• The Daily Shift Report an Owner Actually Reads (and How Cameras Write It)
• Shop-Floor Discipline Without Micromanaging: What Cameras Actually Reveal
• Running Women on the Night Shift in India: The CCTV the 2026 Rules Now Expect

FAQ

What is the overtime rate in Indian factories? Twice the ordinary rate of wages, under section 27 of the OSH Code, 2020. Overtime also needs the worker's consent, and it is calculated daily or weekly, whichever is better for the worker. The Code on Wages repeats the same floor of not less than twice the normal rate.

Is overtime calculated on basic salary or gross salary? On "wages" as the Code on Wages defines them: basic pay plus dearness allowance (and retaining allowance). HRA, conveyance and overtime allowance are excluded. Excluded items are added back only where they exceed half of total remuneration.

How do I calculate the hourly overtime rate from a monthly wage? Divide the monthly wage by 26 to get the daily rate, then by 8 to get the hourly rate, then double it. For ₹16,000 a month: 16,000 ÷ 26 ÷ 8 = ₹76.92, and twice that is ₹153.85 an hour. Check whether your state rules use a different divisor.

How many overtime hours are allowed per quarter? Your state sets the limit. The OSH (Central) Rules, 2026 use 144 hours a quarter for the establishments they cover, and several states have moved to similar levels. Check your state's current rules and notifications before planning sustained overtime.

Is overtime cheaper than adding a shift? For short peaks, usually yes, because there is no hiring or training. For sustained volume, an extra shift pays the ordinary rate rather than double. Once overtime runs for months, compare the two on full cost.

Mama reads a factory's existing cameras and each morning tells the owner where machine and line hours were lost the day before, at line and shift level, never by name. Mama can draw a camera plan for the lines that run the most overtime. Leave an email or phone in the form below.