How to Set an Overtime Approval Process That Works

Unapproved overtime is one of the quiet leaks in a payroll budget, and unpaid approved overtime is one of the fastest ways to lose good workers. An approval process sits between the two: it decides who can ask for overtime, who approves, when, and how the approved hours reach payroll. This guide covers pre-approval and post-approval, consent, detection from punches, caps, deadlines and the records to keep, with a week of real decisions as an example.

Pre-approval or post-approval

In pre-approval, the supervisor asks for overtime before it is worked: this order must ship tonight, so four packers are needed for two extra hours. The manager approves the plan and the workers consent. In post-approval, overtime is detected from punches after the day, and the manager confirms which hours were genuinely needed. Plants and warehouses with planned peaks suit pre-approval; teams with unpredictable closing times, such as service desks and hospitals, often need post-approval. A combination works well: planned overtime is approved in advance, and anything else detected from punches goes for approval within two days.

Consent and caps

Work beyond the prescribed hours is overtime, paid at twice the ordinary wage rate, and needs the worker's consent under the working hours rules. Record consent for each spell, not a blanket line in the appointment letter that nobody remembers. Set a cap per person per month, and a lower cap per week in busy seasons, so a few willing workers do not carry the load until they burn out. A cap also forces the conversation about hiring when overtime has become the normal way of working.

Worked example: a week of overtime decisions

A Ludhiana bicycle parts unit has a policy: overtime counts after the shift ends, with a minimum of 30 minutes, approval by the production manager and then HR, and a cap of 40 hours per person per month. On Monday the production manager pre-approves 2 hours for 12 workers on Line 3 to finish an export order, and each worker signs the consent sheet. On Wednesday the punches show 3 workers on Line 1 stayed 50 minutes after the shift with no request. The manager checks: one was finishing a machine changeover that could not wait, so it is approved; two stayed for a meeting that did not need them, so it is rejected with a reason. HR approves the week on Friday, and payroll picks up 24 hours plus 50 minutes.

Records and hand-off to payroll

Payroll should only ever see approved overtime, and every approved hour should trace back to a punch, an approval and a consent. Set a deadline, such as two working days after the month closes, after which HR decides any overtime still open rather than leaving it pending. Report overtime hours by team every month next to headcount and output, so managers see what their approvals cost. If a team's overtime keeps hitting the cap, treat it as a staffing problem to solve, not an approval to keep repeating.

Step by step

Write the overtime policy. State when overtime starts, the minimum counted, any rounding, the cap, the approvers and the payout, and share it with supervisors and workers.
Choose pre or post-approval by team. Use pre-approval for planned work and post-approval for unpredictable closing times, or combine both with a short deadline for post-approval.
Record worker consent. Take consent for each spell of overtime on a sheet or in the system, and keep it with the approval for audit.
Detect overtime from punches. Compare punches with the shift so no overtime is missed or invented. ZeniaHR detects overtime from punches every night, based on the overtime policy.
Approve in two steps. The manager confirms the work was needed and HR checks the policy and cap. ZeniaHR routes overtime to the manager and then HR, with bulk approve or reject.
Apply caps and deadlines. Stop approvals beyond the monthly cap without a senior sign-off, and close each month's overtime within two working days of month end.
Send approved hours to payroll. Only approved hours reach payroll. In ZeniaHR, approved overtime becomes a payroll earning or a comp-off credit, depending on the payout set in the policy.
Review overtime by team monthly. Share hours and cost by team with department heads, and act on teams that sit at the cap month after month.

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Frequently asked questions

Who should approve overtime?

The reporting manager, who needs the work done, should confirm the overtime was necessary, and HR should check it against the policy, the cap and the worker's consent. Two steps stop both unnecessary overtime and approved hours that never reach payroll, and they give every paid hour a clear owner.

Should overtime be approved before or after it is worked?

Planned overtime, such as a known export deadline, should be approved before it is worked, with each worker's consent. Unplanned overtime, such as a late emergency, can be approved after the day from punches, within a short deadline. Teams often need both routes, written into one policy.

Is employee consent required for overtime in India?

Yes. Under the OSH Code, work beyond the prescribed hours is overtime, paid at twice the ordinary wage rate, and it needs the worker's consent. Record consent for each spell of overtime rather than relying on a general line in the appointment letter, and keep it with the approval.

How do you stop unapproved overtime?

Detect overtime from punches so it is visible, and ask for a reason for any time beyond the shift. Decide within two days whether it was needed, reject overtime that was not required and tell the employee why, set caps per person, and ask managers to plan work so people can leave on time.