Where extra hours creep in
None of these situations is unusual. The trouble is that they are rarely recorded, so the owner cannot see what they cost and the worker cannot prove what was worked. Punches solve both problems: the system spots extra time every night and puts it in front of the supervisor for a decision.
- Twelve-hour factory shifts run as routine
- Shop staff staying until the last festival customer leaves
- Godown loading late for an outstation truck
- Accounts staff working evenings at year-end closing
- Drivers on long delivery runs to nearby towns
Twice the ordinary rate, with consent
Overtime under the OSH Code costs twice the ordinary wage rate per hour, and it needs the worker's consent. A flat ₹50 an hour handed out from the cash counter may fall short of that, and it leaves no record either way. Pay overtime through payroll, where the hours and the calculation are visible on the payslip, and keep the worker's written consent on file for regular overtime. The overtime wages guide explains the terms.
Worked example: what a 12-hour day really costs
A machine operator earns a monthly gross of ₹14,560 on a 26-day basis, which is ₹560 a day and ₹70 an hour. On a 12-hour shift he works 4 overtime hours a day, worth 4 x ₹70 x 2 = ₹560, the same as his ordinary day's pay. Over 26 working days that is 26 x ₹560 = ₹14,560 of overtime, equal to his entire gross. Owners who see this number often decide that a third shift, or one more operator, costs less.
Paying overtime through payroll
Switch on the overtime policy, let the system detect extra hours from punches each night, and have the supervisor approve them. Approved overtime becomes a payroll earning at the gross day rate divided by 8, times the hours, times the multiplier. The payslip shows it on its own line, which ends the end-of-week cash envelope and the arguments that usually come with it.
How to set it up in ZeniaHR
- Turn the overtime policy on and count beyond full-day hours, so a 12-hour shift shows 4 hours of overtime; leave the minimum of 30 minutes and the rounding down to 15 minutes as they are.
- Put 2 or more as the multiplier for normal days, weekly offs and holidays alike, and add a monthly cap if you want to limit extra hours.
- Require approval, so each night's detected overtime waits for the supervisor and then HR.
- Pay approved overtime through the monthly payroll instead of cash, so it appears on the payslip.
- Each month, look at approved overtime by department to see where another hire or another shift would cost less.
Read more about overtime in ZeniaHR.
Roles this applies to
See overtime for family businesses and smes in a demo
We set up your locations, shifts and rules on a video call and show it running for your team. Free for your first 50 employees.
Book a free demoSee pricingFrequently asked questions
Can overtime be paid at a fixed hourly rate?
A fixed hourly rate works only if it is at least twice the worker's ordinary wage rate, since that is the legal rate for overtime. Paying it through payroll is better than cash from the counter, because the hours, the rate and the amount are all recorded on the payslip.
Do family members get overtime?
Relatives who are employees and count as workers have the same rights as anyone else, including overtime at two times their normal wage rate. In practice many family members hold managerial roles that fall outside overtime. Decide by role, not by relationship, and write the decision down.
How can a small factory reduce overtime costs?
Record overtime from punches first, so you know the real hours. Then compare the monthly cost with the cost of an extra operator or a third shift. Where 12-hour shifts are routine, the overtime can equal a full extra salary per worker, and adding people is often cheaper.