Workers can anticipate a modification in how and who gets overtime pay now that the New Labour Codes and matching main federal government guidelines have actually been informed. The New Labour Codes were formally informed on November 21, 2025 and the main federal government guidelines followed in May 2026.
Under the brand-new code, the legal structure broadly keeps the basic working hour structure while empowering suitable federal governments (main or state) to recommend comprehensive guidelines relating to everyday work hours, overtime limitations, and rest periods. The suitable federal government needs to alert the guidelines of the New Labour Code for staff members operating in that state.
How is overwork specified under the brand-new labour code?
Mayank Parashar, Legal Associate at Clasis Law discussed to ET Wealth Online that under the Occupational Safety, Health and Working Conditions Code, 2020 (OSH Code) the modified structure is as follows:
- Typical working hours: Typical working hours are normally anticipated to stay capped at 8 hours each day;
- Operating hour limitation: The overall variety of working hours continues to be the 48 hours a week; and
- Overtime pay: Overtime incomes continue to be payable for every single hour or part thereof operated in excess of the recommended working hours, at an overtime rate which will not be less than two times the typical rate of salaries.
Parashar shares some essential elements of overtime pay:
- Permission: Overtime work is to be carried out based on the permission of the employee, while the suitable federal government might recommend overtime limitations.
- Working hours: Time invested by an employee in going through medical exams or providing info under the structure is dealt with as working hours for the function of overtime computation.
- Time computation: In determining overtime, a portion in between 15 and thirty minutes is counted as 30 minutes, while overtime surpassing 30 minutes is settled and dealt with as one hour.
- Estimation for everyday wage employees: For monthly-rated employees, day-to-day incomes for calculating overtime are computed as one twenty-sixth (1/26th) of the month-to-month salaries.
- Optimum limitations: Overtime is allowed in defined classifications of work and remarkable situations, based on an optimum limitation of 144 overtime hours in a quarter.
According to Parashar, the modified structure presents a more standardised meaning of “wages”which can affect overtime calculation and overtime payments.
Parashar states that companies are needed to keep proposed records and signs up associating with overtime work, participation, and incomes digitally or otherwise as recommended by the law.
Who gets approved for overtime pay?
The OSH Code broadly supplies overtime security for “workers”whereas the Wages Code offers overtime privilege in relation to staff members whose minimum rates of earnings have actually been repaired under the Wages Code.
According to Parashar, the position ends up being more intricate in the case of white-collar and employed staff members.
Parashar states: “Historically, managerial and supervisory employees were often excluded from overtime benefits under labour legislations. The same approach is likely to continue under the Labour Codes framework.”
In practice, Parashar states overtime privilege can rely on:
- classification alone not being determinative;
- the real nature of tasks carried out;
- level of supervisory authority worked out; and
- wage limits recommended under relevant guidelines.
Parashar states: “Consequently, employees classified as managers or supervisors may still raise claims where their functions are operational rather than managerial in substance.”
Therefore, Parashar highlights that companies might require to thoroughly assess worker categories and real task functions while structuring overtime policies under the Labour Codes structure, as classification alone might not suffice to leave out staff members from overtime privileges.
Parashar states: “From an employee perspective, individuals performing substantially operational or non-managerial functions may continue to assert overtime claims notwithstanding managerial or supervisory designations.”
Parashar discusses the monetary effect on staff members. Here are some illustrative circumstances:
i. Scenario 1: Broader wage meaning increasing overtime spend for a staff member making Rs 30,000 monthly and working 20 overtime hours. Previously, if just Rs 12,000 was thought about for overtime computation, the overtime payment would have been around Rs 2,300.
Parashar states: “Under the modified structure, if Rs 20,000 is dealt with as “wages” for overtime functions, the overtime payment for the very same 20 hours might increase to around Rs 3,800-4,000.”
ii. Situation 2: Settling the overtime hours: Suppose a worker works overtime for 8 hours and 40 minutes. Previously, some business might have counted just 8 hours for overtime estimation. Under the modified guidelines, overtime going beyond 30 minutes might be settled to one complete hour.
Parashar states: “As a result, the employee may receive overtime wages for 9 hours instead of 8 hours.”
iii. Circumstance 3: Standardised computation for monthly-wage staff members: Suppose a monthly-rated staff member makes Rs 30,000 each month. Previously, companies typically followed various approaches for overtime computations, resulting in irregular payments. Under the modified structure, everyday earnings are usually computed as 1/26th of month-to-month earnings.
Appropriately, the day-to-day wage would be roughly Rs 1,154, producing a more consistent basis for overtime estimations throughout facilities. Parashar states that for staff members, the modifications might lead to greater overtime settlement in addition to a more foreseeable and clearer structure.