Mode for calculation of overtime wages
For any work in excess of nine hours on any day or for more than 48 hours in any week, overtime wages are to be paid at the rate of double the wages. It is provided therein that where a worker is required to work beyond the normal hours of work or on any day of rest, he shall be entitled to wages at rate of twice his ordinary rate of wages in respect of the overtime work or work done on a day of rest, as the case may be.

The cases where a workman is paid a daily rate present no difficulty. However, when payment is made on monthly scale of pay, the daily rate of wages for a worker can be obtained only by dividing the amount of wages for 30 days by 26. This is done because the workman is entitled to four days as weekly rest during which period he does not work. The reason is that workman actually gets monthly wages for the work done only for 26 days. Thus for a workman, it is the actual receipt for 26 days which is his monthly scale of pay, i.e., 30 days wages. Therefore, a day’s wage should mean the result obtained by dividing the monthly wages by actual number of working days, i.e., 26 days. This principle will, however, be applicable in case of such workers who get monthly wages only for the actual number of working days. The formula for calculation of the overtime wages for one hour is to divide the month’s wages by 26 into the number of normal working hours and the result so obtained by them then multiplied by two to calculate one hour’s overtime wages; P. Radhakrishnan Nair v. K.S.R.T.C., 1983 Lab. IC 276 (Ker. HC). Similarly, a day’s wage should mean the result obtained by dividing the monthly wages by actual number of working days; K.S. Verma v. The Madhya Pradesh State Road Transport Corporation, 1979 Lab IC 107: 1979 LLR 150.

In one case before the Supreme Court, the management had prescribed 39 hours and had agreed to pay overtime wages for any work taken in excess of such normal working hours and upto the maximum, i.e., 48 hours at 1½ times the ordinary rate of wages and beyond the maximum, i.e., 48 hours and upto 54 hours at double the rate of ordinary wages and the question posed was where the employer prescribes working hours less than the maximum permissible in the statute, does he incur the obligation to pay overtime wages at the rates prescribed in the Tamil Nadu Shops & Establishments Act, 1947. The Supreme Court allowed the appeals filed by the management and reversed the decision of the High Court directing payment of overtime wages by twice the ordinary rates of wages for any work beyond the prescribed 39 hours and upto 48 hours; Philips India Ltd. v. Labour Court, Madras, AIR 1985 SC 1034: 1985 (1) LLN 633: 1985 (66) FJR 474.

However, the Allahabad High Court has held that if the workers are required to work for additional hours but if such additional hours will be less than 48 hours in a week, the employees will be entitled to wages and not overtime; New Victoria Mills, Unit of National Textile Corporation, Uttar Pradesh Ltd. v. Labour Court (1) Kanpur, 1990 LLR 113.

Claim for overtime should be made within reasonable time. It has been held by Delhi High Court that the claim for overtime by the employee when he was in Iraq or if he could not make his claim there, he should have served a notice in writing upto the employer as soon as he returned to India; Bhandari Builders v. M.K. Seth, 1988 (72) FJR 134: 1988 LLR 91: 1988(1) CLR 279.

It is, however clarified that the Delhi Shops & Establishments Act, 1954 is not exhaustive on all the rights and obligations of the employers and the employees as such the provisions of Industrial Disputes Act, 1947 being Central Act governs the matters.

For instance if an employer who proposes to effect any change prejudicial to the workmen, in respect of any matter specified in the fourth schedule to the Act, should give the workmen concerned twenty one days notice under section 9A of the Industrial Disputes Act. The real object and purpose of section 9A of the Act is to afford an opportunity to the workmen to consider the effect of the proposed change and, if necessary, to represent their point of view on the proposal. Such consultation further serves to stimulate a feeling of common interest of the management and workmen in industrial progress, efficiency and increased productivity. This approach on the part of the employer would reflect his harmonious and sympathetic cooperation in improving the status and dignity of the employee in accordance with the egalitarian and progressive trend of our industrial jurisprudence which strives to treat capital and labour as co-sharers and to break away from the tradition of labour’s subservience to capital. In order to achieve the object underlying section 9A, it would be more appropriate to place on the fourth schedule read with section 9A of the Industrial Disputes Act, a construction liberal enough to include change of weekly rest days from Sundays to some other week day.

The Fourth Schedule as appended to the Industrial Disputes Act, 1947 provides as follows:
“Conditions of Service for Change of which Notice is to be given

1. Wages, including the period and mode of payment;
2. Contribution paid, or payable, by the employer to any provident fund or pension fund or for the benefit of the workmen under any law for the time being in force;
3. Compensatory and other allowances;
4. Hours of work and rest intervals;
5. Leave with wages and holidays;
6. Starting alteration or discontinuance of shift working otherwise than in accordance with standing orders;
7. Classification by grades;
8. Withdrawal of any customary concession or privilege or change in usage;
9. Introduction of new rules of discipline, or alteration of existing rules, except in so far as they are provided in standing orders;
10. Rationalisation, standardization or improvement of plant or technique which is likely to lead to retrenchment of workmen;
11. Any increases or reduction (other than casual) in the number of persons employed or to be employed in any occupation or process or department or shift, not occasioned by circumstances over which the employer has no control.”

For instance, in one case, it has been held that increasing of half an hour daily by the employees will amount to change in conditions of service hence notice under section 9A of the Industrial Disputes Act will be imperative; Director of Agriculture v. Dev Raj, 2006 LLR 1019 (HP HC).