Overtime Rules in India 2026: Pay, Hours & Compliance

Your engineer in Bengaluru worked eleven hours to ship a release. Do you owe double pay for three of them?

The answer changed on 21 November 2025, when India brought all four labour codes into force and retired the Factories Act, 1948 along with 28 other central laws. Overtime is still twice the ordinary wage rate. What moved is the hour that triggers it, who qualifies, and the registers you produce when an inspector asks.

We run payroll for 2,000+ employees across India. Here are the 2026 thresholds, the calculation, the caps still in transition, the records and the penalties.

What are the overtime rules in India in 2026?

Overtime is any work beyond the statutory daily or weekly limit, paid at twice the ordinary rate of wages. Section 25 of the Occupational Safety, Health and Working Conditions Code, 2020 caps a normal day at 8 hours and a week at 48, inside a 12-hour spread-over. Section 27 sets the rate and adds the detail most policies miss: the overtime period is calculated daily or weekly, whichever is more favourable to the worker.

Here is what applies to an adult worker in a covered establishment today.

• A normal day of 8 hours of work, inside a spread-over of no more than 12 hours.
• A normal week of 48 hours, with one full rest day, ordinarily Sunday.
• A rest interval of at least 30 minutes after every 5 hours of continuous work.
• Overtime at twice the ordinary rate, on whichever basis helps the worker more.
• Consent, because overtime cannot be imposed on anyone.

Where a state permits a 10 or 12-hour working day, overtime still begins at the eighth hour. The longer day changes how hours may be arranged, not when the double rate starts.

Which law governs overtime in India now?

Until late 2025, overtime questions were answered from the Factories Act, 1948 or a state Shops and Establishments Act. The OSH Code subsumed 13 statutes, including both the Factories Act and the Contract Labour Act. If your policy still cites the Factories Act, it is quoting a repealed law. Our guide to the new labour codes in India tracks the wider rollout.

The Code on Wages, 2019 does the other half. It fixes one definition of wages across all four codes and sets a floor: basic pay plus dearness allowance must be at least 50 percent of total remuneration.

Since overtime is computed on ordinary wages, that floor raised overtime cost for every company that had kept basic pay low. Read how it reshapes salary structure in India.

The Ministry of Labour and Employment settled the eligibility question in its Additional FAQs on Labour Codes issued on 16 March 2026.

"Any employee, including workers, whose minimum rate of wages is fixed under the Wages Code, is eligible for overtime."

One caveat matters more than anything else here. The codes are in force, but the rules that operationalise them are not. Draft central rules went to the gazette on 30 December 2025 for comment. Until your state notifies its own rules, labour departments keep applying the caps and forms they used before, so you track both regimes at once. Our playbook on labor laws in India maps it state by state.

Who is eligible for overtime pay in India?

This is where global employers are most exposed. The old rule of thumb was simple: workers get overtime, managers do not. Under the Code on Wages that shortcut no longer holds.

Three groups need a fresh look before your next payroll run.

• Non-supervisory staff: Eligible, exactly as before, whether they sit on a shop floor or in an office.
• Supervisors and managers: Eligible if a minimum rate of wages has been fixed for their category. Job title is not the test any more. What decides it is whether a notified minimum wage covers the role.
• Contract workers: Eligible, and the principal employer shares liability with the contractor. This is the most common source of surprise notices.

If you have been classifying senior engineers or team leads as exempt managers to keep overtime off the books, that classification needs a legal review this quarter. The same logic drives contractor misclassification risk in India, and inspectors usually find both problems in one visit.

Eligibility now hangs on the notified wage floor for a role, so you cannot answer the overtime question without the wage schedules. Read our guide to the minimum wage in India next.

Indian HR practitioners have argued the logic for years. As one contributor put it on a long-running CiteHR thread on overtime calculation:

"OT is strictly a compensation for working extra time by a worker who is already tired having worked his regular duty hours and hence the rate is double."

The transition has also produced noise. In December 2025 the government publicly debunked a fake video about the new labour codes circulating on social media. Point your team at the statute or the Ministry FAQs, not a forwarded clip.

How is overtime pay calculated in India?

The formula has not changed shape. Two inputs have. Ordinary wages follow the single code definition, and part hours now round up.

Hourly rate = (Basic + DA + retaining allowance) / (26 x 8)

Overtime pay = Hourly rate x 2 x Overtime hours

Three rules govern the inputs, and applying them consistently removes most disputes.

1. For monthly paid staff, divide the monthly wage by 26 to get the daily wage, then by 8 to get the hourly rate.
2. Round part hours up. Between 15 and 30 extra minutes counts as 30 minutes. Anything above 30 minutes counts as a full hour.
3. Pay it in the same cycle. Overtime wages fall due at the end of the wage period in which they were earned.

That third rule catches companies whose approval workflow closes after payroll. If overtime approved on the 28th lands in next month's payslip, you have a timing breach even though the amount is right. Our breakdown of the payroll cycle in India shows where to set the cut-off.

Notice what the 50 percent floor does to that base. Had the same total pay of Rs 80,000 been split as Rs 32,000 basic and Rs 48,000 allowances, the code treats the excess above half as wages, lifting the base and the overtime rate with it. Overtime allowance itself counts inside that test. Our India salary calculator shows how a CTC splits today.

Provident fund is not calculated on overtime wages, so a heavy overtime month raises gross pay without raising the PF liability, though it does raise the tax withheld. For what does attract contributions, see PF, ESI and gratuity compliance.

Overtime is also excluded from the wage definition, so it does not inflate the base for gratuity or statutory bonus in India, which runs on its own calculation.

How many overtime hours are allowed in a quarter in India?

There is no single number in 2026, and anyone who gives you one is glossing over the transition. The draft central rules propose that no worker shall work overtime exceeding 144 hours in any quarter. Earlier drafts said 125. The Factories Act ceiling most employers grew up with was 50. Until a state notifies its rules, its existing cap is what an inspector holds you to.

These are the caps still applied in the states where global teams most often sit.

Two habits keep you safe. Set an internal cap below the legal one, and track the aggregate per employee per quarter rather than per month. If your team runs overnight support coverage from India, build the cap into the roster instead of discovering it at payroll.

The codes also opened up night work. Women may now work at night in every category of establishment, with their consent and prescribed safety measures, which lifts a constraint that used to shape retail, hospitality and support rosters. Weekly rest sits alongside this, and our guide to leave policy and holidays in India covers the overlap.

What overtime records must Indian employers keep?

Record failures are punished separately from wage failures, which is why they dominate inspection notices. Section 57 of the OSH Code requires the work schedule to be displayed in Form VII. Section 58 requires registers of employment, wages and overtime, with the overtime register kept in Form VIII.

Keep these five items current at all times.

• The Form VII work schedule, displayed in English, Hindi or the language most of your workers understand.
• The Form VIII overtime register, showing worker details, overtime hours and wages paid.
• Daily attendance data reflecting hours actually worked, not hours scheduled.
• A written trail of the worker's consent and the manager's authorisation for each instance.
• Proof that overtime was paid inside the correct wage period.

Records must be kept for one calendar year from the last entry and produced to the Inspector-cum-Facilitator on demand. Electronic registers are accepted where they are tamper evident, which is the easiest upgrade for a distributed team.

The Ministry's Compliance Handbook for Employers Under the Four Labour Codes lists every register and return in one place. Keep it open next to your payroll calendar.

Overtime records are one row in a longer list. Our guide to statutory compliance in HR covers the rest of what an inspection asks for.

Several of those duties switch on at headcount thresholds, so read the compliance checklist after 10 employees if your India team is growing.

What are the penalties for overtime violations in India?

The codes swapped the old imprisonment-heavy structure for larger monetary penalties and a sharper line between a first slip and a pattern.

One softener is worth knowing. The codes allow an opportunity to comply before prosecution for several first-time offences, so a quick correction is treated differently from a habit. That only helps if your registers show what happened. Where a role was wrongly treated as exempt, misclassification penalties stack on top of wage arrears.

Overtime arrears rarely arrive alone. They surface in reviews that also pick up PF, TDS and professional tax gaps, which is why our guide to payroll compliance in India treats them as one exposure.

How do overtime rules differ by sector in India?

The code is uniform now, but the operational risk is not. Four sectors account for most disputes.

• IT and software services: On-call rotations and production escalations are the exposure. Work outside scheduled hours in response to an incident counts as working time when it forms a regular pattern, however informal. Flexible and remote schedules do not remove the duty to record actual hours.
• Manufacturing: Now under the OSH Code rather than the Factories Act. The 12-hour spread-over still binds, and extended spread-over is allowed only for defined situations such as urgent repairs, continuous-process operations and machinery breakdown.
• Healthcare: Round-the-clock rosters make the daily limit hard to hold without deliberate shift design. On-call time for clinical staff is increasingly treated as compensable, and nursing and paramedic staff on notified minimum wages sit inside the overtime net.
• Retail and hospitality: Festive peaks are the pressure point. Seasonal flexibility exists but needs prior notice to the labour department, and double pay applies regardless. A worker called in on the weekly rest day gets a compensatory day off as well as overtime pay.

Whatever the sector, two documents settle an inspection: a written policy and an accurate register.

Shift design also runs into state leave rules, which the codes did not fully harmonise. For a Bengaluru team, check the leave policy in Karnataka before finalising a roster.

For teams in Mumbai or Pune the picture differs again, and the leave policy in Maharashtra is the place to start.

How do you build a compliant overtime policy in India?

Most overtime disputes we handle are not deliberate. They come from a policy written once and never mapped to the statute. Five steps close that gap.

1. Map every role to the code that covers it, and establish whether a notified minimum wage applies. That decides eligibility now, more than the job title does.
2. Write the trigger down: overtime begins after 8 hours in a day or 48 in a week, whichever comes first, on the more favourable basis.
3. Build consent and approval into the workflow. Overtime needs the worker's agreement, so the request trail is compliance evidence, not admin overhead.
4. Set an internal quarterly cap below the legal ceiling for each state, and revisit it when a state notifies new rules.
5. Reconcile the register to payroll every month before the wage period closes, so overtime lands in the right cycle.

Review the policy once a year at minimum. State notifications are still arriving through 2026.

An overtime section belongs in a wider handbook, not a standalone memo. Our guide to HR policies in India shows what it should sit beside.

The same attendance data drives deductions the other way. See how loss of pay is calculated when hours fall short.

How does Wisemonk keep your India overtime compliant?

Wisemonk is an India-specialist Employer of Record. Global companies hire, pay and manage employees in India through us without a local entity, and overtime compliance is part of the monthly run.

• Role-by-role classification, so you know who qualifies before the first payslip. Part of our EOR services in India.
• Monthly payroll in India with overtime computed at the statutory rate and paid inside the correct wage period.
• Form VII and Form VIII maintained and kept inspection ready, alongside attendance and consent records.
• PF, ESI, TDS and professional tax filed end to end, with employee benefits in India administered on the same file.
• Onboarding in days rather than months when you hire employees in India without a local entity.

We support 300+ global companies, manage 2,000+ employees in India and process over $20M in payroll. Pricing starts at $99 per employee per month, with no FX markup or setup fee.

We also handle background verification, equipment procurement and contractor management, and help teams build an offshore team in India or a Global Capability Centre when scale justifies it.

When a team outgrows the EOR model, we run the company registration in India and move the employment record across with no gap in payroll.

What clients say about India compliance support

Numbers explain the model. What clients say after a year of payroll cycles tells you whether it works.

"They've handled everything from payroll and statutory compliance to equipment procurement."

Monika Russell, CFO, Minehub (Canada)

Minehub runs an India team with no Indian entity. Wisemonk holds the employment record, runs monthly payroll including overtime, files the statutory returns and ships the hardware, so finance reviews one invoice instead of reconciling four vendors.

"I've been working with Wisemonk as an EOR employee for past two years. The onboarding call was really good and they even helped my team onboarding as well. Their interface is good and I can manage my team in a single interface."

Felix S., Senior Software Development Engineer.

That single-interface point matters for overtime. When the daily threshold moved in November 2025, clients got the answer from a named person who already knew their payroll, not a ticket queue. More feedback is on Clutch.

Want this handled for your team? Book a call and we will map your roles, hours and registers against the rules in each state where you employ people.