Overtime Calculation Under Factories Act in India: Complete Guide (2026 Update)

Quick answer: Overtime in an Indian factory is paid at twice the rate of wages. The Factories Act, 1948, which set this rule for decades, was repealed on 21 November 2025 and replaced by the OSH Code, 2020. The OSH (Central) Rules were notified on 8 May 2026, and the Ministry of Labour and Employment’s Additional FAQs of 16 March 2026 explain how to apply the Code. The basic calculation is simple: hourly wage rate × overtime hours × 2. Check the wage base, the trigger, the quarterly cap and your state’s rules before you run payroll.

It is the 29th, and the payroll executive at a 150-worker factory in Ahmedabad is building the overtime sheet. Half the team works 8-hour shifts six days a week. A few daily-wage helpers stayed two extra hours on Saturday. The older HR policy still says “as per Section 59 of the Factories Act”, but a new circular says the law has changed. Nobody is sure which hours count, which rate applies, or whether the quarterly overtime total is within the limit.

This guide is for factory owners, plant HR heads, payroll executives, accountants and production managers in Gujarat and across India. It explains whether the Factories Act still applies, what the OSH Code and the 2026 Central Rules say about overtime, how to calculate overtime pay with worked examples, how limits, consent and registers work, common mistakes, a 7-step workflow, a 9-point checklist, how Tankhwa Patra HRMS helps and answers to common questions.

Please note: Labour codes, central rules and state rules on overtime are changing, and commentary from different sources does not always agree on numbers such as the quarterly cap. This guide reflects publicly available information as of October 2026. It is not legal or tax advice. Verify the current position for your state and industry with the latest government notification or a qualified labour-law consultant, CA or payroll professional before you finalise your overtime policy or pay.

Does the Factories Act still apply to overtime in 2026?

No, not as a standalone law. The Factories Act, 1948 was repealed on 21 November 2025, when the Occupational Safety, Health and Working Conditions (OSH) Code, 2020 came into force. Overtime for factories is now governed by the OSH Code, the OSH (Central) Rules, 2026 and your state’s rules.

Two practical points follow from this:

• Old policies need updating. An overtime policy that still cites the Factories Act refers to a repealed law. Update the references, and check whether your actual rules have changed.
• State rules matter. Commentary on the transition says existing factory licences and state factories rules generally continue under the Code’s savings provisions until each state notifies its own OSH rules. Where your state stands on this decides which daily limit, quarterly cap and procedure apply to you, so confirm it for Gujarat or your state.

People still search for “overtime under the Factories Act”, and many factories still follow the old routine, so this guide explains both the old rule and the current one.

What are the overtime rules: Factories Act vs OSH Code?

The core idea has stayed the same: extra work beyond the normal limit is paid at double the rate. What has changed is the daily limit, the quarterly cap, the worker consent requirement and where the rules are written. The table compares the two frameworks, based on publicly available commentary.

Point	Factories Act, 1948 (repealed)	OSH Code, 2020, Central Rules 2026 and Ministry FAQs
Daily working limit	9 hours	8 hours
Weekly working limit	48 hours	48 hours
Overtime rate	Twice the ordinary rate of wages	Twice the rate of wages; the Code on Wages sets a minimum of twice the normal rate
When overtime starts	Beyond the daily or weekly limit	Ministry FAQ: beyond 8 hours in a day or 48 hours in a week. Central Rules: beyond 8 hours a day for daily-wage workers, beyond 48 hours a week for others
Quarterly overtime cap	75 hours in a quarter (as commonly cited)	144 hours under the notified Central Rules, which cover central-sphere establishments; state caps vary
Worker consent	Not a headline requirement	Overtime requires the worker’s consent
Payment timing	With wages	At the end of each wage period
Who is eligible	Workers in factories	Employees whose minimum rate of wages is fixed under the Code on Wages, per the Ministry FAQ
Records	Overtime register	Registers mandatory; electronic registers permitted

The Ministry FAQ and the Central Rules read slightly differently on the trigger. The FAQ speaks of 8 hours a day or 48 hours a week, while the Central Rules separate daily-wage workers from other workers. Follow the rule that applies to your establishment, and confirm the reading with a labour-law consultant. Older articles may quote 125 hours as the quarterly cap, which appeared in an earlier draft of the rules; the notified Central Rules say 144.

What do the Ministry of Labour’s FAQs say about overtime?

The Ministry of Labour and Employment’s Additional FAQs on the Labour Codes (as on 16 March 2026) are the closest thing to an official explanation of how to apply the overtime rules. They are guidance, so read them with the Code, the Central Rules and your state’s rules.

• Overtime counts from the eighth hour. Even where a state notifies a longer maximum working day, up to 12 hours, overtime is still counted from the eighth hour, not from the twelfth.
• Rate and timing. Overtime is paid at twice the normal rate of wages, at the end of each wage period.
• Eligibility. Overtime applies to employees, including workers, whose minimum rate of wages is fixed under the Code on Wages.
• Wage definition. Overtime allowance counts among the components in the 50 per cent wage calculation. Where these components together exceed 50 per cent of total remuneration, the excess is added back to wages.

Which overtime rules apply to your factory: central or state?

The 144-hour quarterly cap in the Central Rules applies to establishments where the Central Government is the appropriate government, such as mines, railways, major ports and central public undertakings. Most private factories fall under their state’s rules, which can set a different daily limit, spread-over and quarterly cap.

• Central-sphere establishments: follow the OSH (Central) Rules, 2026.
• Most private factories: follow the state’s rules. Several states were still notifying their OSH rules through 2026, so your state’s older factories rules may continue until then.
• Gujarat factories: confirm with the Gujarat labour department notifications, or with a local labour-law consultant, which daily limit, quarterly cap and registers apply to your factory today.

Write down which rule set you follow and the date you checked it, so your overtime policy can be updated when the state notifies new rules.

How is overtime calculated for factory workers?

Overtime pay equals the hourly wage rate, multiplied by the number of overtime hours, multiplied by two. The wage rate comes from the wages you pay the worker, and the overtime hours are the hours beyond the daily or weekly limit that applies to that worker.

Formula: Overtime pay = Hourly rate of wages × Overtime hours × 2

Step 1: find the hourly rate

Divide the worker’s wages by the days and hours the applicable rules use. For a monthly-paid worker, commentary on the Central Rules says the daily wage is taken as one twenty-sixth of the monthly wages (rule 69), and the hourly rate as one-eighth of the daily wage. The examples below use this method. State rules may specify a different divisor, so confirm yours and apply it the same way to every worker.

Step 2: count the overtime hours

For a daily-wage worker, overtime is the time worked beyond 8 hours in a day. For other workers, it is the time worked beyond 48 hours in a week. Count from attendance punches, not from memory, and apply the rounding rule for part-hours that your rules or policy set.

Step 3: apply the multiplier and add it to wages

Multiply the overtime hours by the hourly rate and by two. Show overtime as its own line on the salary slip and pay it in line with the wage period.

Example 1: monthly-paid worker (illustrative, not real data)

A worker earns ₹24,000 a month for a 6-day, 48-hour week. The employer’s policy uses a 26-day month and an 8-hour day. In one week the worker works 54 hours.

Step	Working	Result
Daily wage	₹24,000 ÷ 26	₹923.08
Hourly rate	₹923.08 ÷ 8	₹115.38
Overtime hours	54 − 48	6 hours
Overtime pay	6 × ₹115.38 × 2	₹1,384.62

Example 2: daily-wage worker (illustrative, not real data)

A helper is paid ₹800 for an 8-hour day and works 10 hours on Saturday.

Step	Working	Result
Hourly rate	₹800 ÷ 8	₹100
Overtime hours	10 − 8	2 hours
Overtime pay	2 × ₹100 × 2	₹400

These examples use simple assumptions. Your wage base, divisor and rounding rules may differ, so check them before you copy the method.

What counts as wages when you calculate overtime?

The wage base matters as much as the multiplier. Under the old Act, the ordinary rate of wages included the basic wage and certain allowances. Under the Code on Wages, if the listed exclusions from wages together exceed 50 per cent of total remuneration, the excess is added back to wages, and the Ministry’s FAQs confirm that overtime allowance counts among those components. This can raise the base on which overtime is calculated, so review it carefully.

• Identify which pay components your payroll treats as wages for overtime.
• Check whether allowances such as dearness allowance or other regular payments form part of the base under the current rules.
• Exclude items the rules exclude, and keep your reasoning in writing.
• Apply the same base to every worker in the same category.

The definition of wages is a legal and tax question with real cost impact. Confirm your wage base with a CA or labour-law consultant before changing it.

What are the limits, consent and record requirements?

Overtime is not unlimited. The OSH Code makes it subject to the worker’s consent, the rules cap total overtime hours in a quarter, and employers must keep registers. Treat these three as part of every overtime decision, not an afterthought at month-end.

• Consent: overtime needs the worker’s consent. Keep a written or digital record, so you can show that extra hours were agreed.
• Quarterly cap: the Central Rules set 144 hours a quarter for central-sphere establishments, and state caps vary. Track each worker’s running total across the quarter, not only the month.
• Registers: commentary says registers are mandatory and can be kept electronically, with daily in and out times and overtime hours recorded. Penalties for not maintaining registers are significant, so check the current figures with your consultant.
• Women workers and night work: conditions for night work, including consent and safety, are set separately. Confirm them for your factory before scheduling.

Why do overtime calculations go wrong in factories?

Overtime calculations go wrong because hours are recorded late, the wage base is unclear and each supervisor counts differently. Factories using Excel and paper registers often find the same worker’s hours counted twice, or not at all, and the quarterly total is nobody’s job.

• Using an old policy that cites a repealed law and an outdated daily limit.
• Counting overtime from supervisor notes instead of attendance punches.
• Using different divisors for different workers or different months.
• Leaving allowances out of the wage base without checking the current rules.
• Not tracking the quarterly total, so a worker crosses the cap unnoticed.
• Paying overtime in cash outside payroll, with no slip entry or register record.
• Missing consent records for extra hours.
• Counting a night shift that crosses midnight as two partial days.

What does an overtime workflow look like?

A good workflow runs from the punch to a verified payout: capture attendance, count hours by shift, check consent and limits, approve, calculate, pay and record. Every step uses the same data, so the overtime on the slip matches the register.

1. Confirm your rule set. Note whether central or state rules apply and the date you checked them.
2. Define the policy. Write down the wage base, divisor, rounding rule, approval process and consent method.
3. Capture attendance. Use biometric, face-recognition or app punches, not memory.
4. Apply shifts and week-offs. Assign each worker’s shift, so hours beyond the limit are counted correctly, including night shifts.
5. Approve overtime. Supervisors approve extra hours before payroll closes, with the worker’s consent on record.
6. Check the limits. Review each worker’s quarterly total against the cap that applies.
7. Calculate, pay and record. Calculate overtime, show it as a separate line on the slip, pay it with the wage period and keep the register.

How does Tankhwa Patra HRMS help with overtime?

Tankhwa Patra HRMS brings attendance, shifts, overtime and payroll into one system. Overtime is calculated from attendance data by policy, approvals happen before payroll runs, and the result goes to the salary slip. Features below are listed on tankhwapatra.com/features-of-hrms-software; some depend on your plan.

Overtime need	Tankhwa Patra feature	What changes
Hours captured accurately	Biometric and device integration; web and app punch-in/out; offline machine data upload	Overtime comes from punches, not supervisor notes
Rotating shifts and night work	Multiple and rotational shifts; shift roster creation	Each worker’s shift is assigned in the system
Overtime policy	Policy-based overtime rules	Rules are set once and applied the same way
Approval before payout	Overtime approvals	Extra hours are approved before payroll closes
Calculation	Automated overtime calculation	Hours are converted to pay by policy
Payroll and slips	Automated salary processing; automatic salary slip generation	Overtime flows into the salary slip
Week-offs and holidays	Week-off policies; multiple holiday calendars	Different patterns are applied by policy
Worker queries	Employee ESS app	Workers can view attendance and payslips on their phone
Reports	PF, ESIC and PT compliance reports; one-click reports	Reports come from the same payroll data

Tankhwa Patra lists policy-based overtime rules, approvals and automated calculation. For anything specific to the new law, such as a double-rate multiplier setting, a quarterly overtime cap tracker, worker consent records, rounding rules for part-hours or a statutory overtime register format, confirm with the Tankhwa Patra team how your plan handles it.

How do you choose overtime software or process for a factory?

Choose a process that ties overtime to attendance punches, applies one written policy and keeps records you can show to an inspector. Test it with one real week of data before you commit.

9-point checklist

• Current law. Policy cites the OSH Code and your state rules, not only the Factories Act.
• Attendance source. Hours come from punches, not notes.
• Shift handling. Rotating and night shifts are counted correctly.
• Wage base. Written, consistent and checked with a professional.
• Multiplier and rounding. Double-rate and part-hour rules are set and documented.
• Consent. Worker consent is recorded for extra hours.
• Cap tracking. Quarterly overtime is tracked per worker.
• Registers. Overtime and attendance registers are available on demand.
• Slip and payment. Overtime appears as its own line on the slip and is paid with the wage period.

Before a demo, bring your overtime policy, one week of real attendance and your current calculation sheet, so you can test your own scenarios.

What mistakes should you avoid with overtime pay?

The biggest mistakes are relying on an outdated policy, mixing wage bases, ignoring consent and the quarterly total, and paying overtime outside payroll. Most can be avoided with one written policy and one record.

• Citing the repealed Act without checking what applies now.
• Copying the central cap without checking your state’s rules.
• Treating overtime as a verbal arrangement with no consent record.
• Calculating overtime on a different base each month.
• Running a parallel register that drifts away from payroll.
• Paying overtime in cash without a slip entry.
• Assuming software replaces a legal review. Software helps you apply a policy; the policy must be checked by a professional.

Which Tankhwa Patra plan suits a factory?

Tankhwa Patra offers three plans, Dreamer, Performer and Achiever, with higher plans adding more modules. Check current pricing on tankhwapatra.com/pricing and match the plan to what your factory needs: attendance, shifts, overtime and payroll for every shift, plus modules such as onboarding, off-boarding or asset management. Some features depend on the plan, so ask the Tankhwa Patra team which plan covers your headcount and must-have modules.

What do factory owners ask about overtime calculation?

Is the Factories Act still applicable for overtime in India?

No, not as a standalone law. The Factories Act, 1948 was repealed on 21 November 2025 and replaced by the OSH Code, 2020. Existing state factories rules and licences generally continue under the Code’s savings provisions until your state notifies new rules, so confirm your state’s position.

What is the overtime rate in India?

Twice the rate of wages. This was the rule under the Factories Act and it continues under the OSH Code and the 2026 Central Rules. Confirm which wages count toward the rate and how part-hours are rounded for your establishment.

How do you calculate overtime for a monthly salary?

Divide the monthly wage by the days and hours your policy uses to find the hourly rate, count the overtime hours beyond the limit, then multiply the hours by the hourly rate and by two. The example in this guide shows the method with illustrative figures.

When does overtime start under the new rules?

The Ministry’s FAQs say overtime applies beyond 8 hours a day or 48 hours a week, at twice the normal rate, and counts from the eighth hour even where a state allows a longer working day. The Central Rules draw the trigger as beyond 8 hours a day for daily-wage workers and beyond 48 hours a week for other workers. Confirm which reading applies to your establishment.

What is the maximum overtime allowed per quarter?

The notified OSH (Central) Rules set 144 hours a quarter, but they cover establishments where the Central Government is the appropriate government. States set their own caps, and older state caps may continue until a state notifies new rules. An earlier draft of the Central Rules mentioned 125 hours, so older articles may quote that figure. Check the notification for your state before you rely on a number.

Is the worker’s consent required for overtime?

Yes. The OSH Code makes overtime subject to the worker’s consent. Keep a record of consent, written or digital, so you can show that extra hours were agreed.

How should overtime appear on the salary slip?

As its own earnings line, such as “Overtime pay”, with hours and amount where possible, so the worker can check it. The salary slip is also called a tankhwa patra in Hindi. Confirm with the Tankhwa Patra team how overtime is displayed on payslips in your plan.

Can HRMS software calculate overtime automatically?

Yes, in principle. Tankhwa Patra HRMS lists policy-based overtime rules, approvals and automated overtime calculation. Confirm how your plan handles the double rate, quarterly cap tracking and consent records for your factory.

Conclusion

The Factories Act no longer stands on its own, but the idea behind it continues: extra hours cost double, and workers should be paid correctly and on time. What has changed is the legal framework, the limits and the records you need to keep.

A central HRMS gives plant heads and accounts one set of attendance records, one overtime policy and one payroll run, so overtime on the slip matches the register. Use the 9-point checklist during a demo and test it with a real week of data from your busiest shift.

Book a Free Demo or Start a Free Trial of Tankhwa Patra HRMS at tankhwapatra.com.

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Disclaimer: The information provided is for general informational purposes only. It may vary over time, so we recommend verifying the details independently before making any decisions.