Overtime rules for contract staff in India

Which law sets the overtime rules now?

The four Labour Codes came into force on 21 November 2025. Overtime is now covered by two of them, plus the central rules notified under them on 8 May 2026:

• Code on Wages, 2019, section 14: when an employee works "in excess of the number of hours constituting a normal working day", the employer pays for every hour or part of an hour "at the overtime rate which shall not be less than twice the normal rate of wages".
• OSH Code, 2020, section 27: overtime is paid "at the rate of twice the rate of wages", worked out daily or weekly, "whichever is more favourable" to the worker. A worker can be asked to work overtime only with their consent.
• Code on Wages (Central) Rules, 2026, rule 5: a normal working day is eight hours where the wage period is daily. Where it is not daily, the hours are fixed so that the week does not exceed 48 hours.
• OSH (Central) Rules, 2026, rule 69: a daily-wager who works more than eight hours in a day, or any other worker who works more than 48 hours in a week, is entitled to twice the rate of wages for the overtime. It is paid at the end of each wage period.

The old Factories Act, 1948 had the same double-rate rule in section 59, for work beyond nine hours a day or 48 hours a week. It is now repealed by the OSH Code. Older articles that quote nine hours describe the old law.

How do you calculate overtime pay?

1. Find the daily wage. For a monthly-paid worker, rule 69 of the OSH (Central) Rules says the daily wage for this purpose is 1/26 of the monthly wage.
2. Divide by the hours of the normal working day (eight) to get the hourly rate.
3. Multiply by 2 for the overtime rate.
4. Multiply by the overtime hours. Under rule 69, a part hour of 15 to 30 minutes counts as 30 minutes, and more than 30 minutes counts as a full hour.

Work out the pay exactly and round once at the end, not at each step. The overtime calculator does this for single or double rate.

What about 12-hour shifts?

Many security and facility posts run in two 12-hour shifts. The law does not make a 12-hour shift a normal working day. For a daily-wage worker, the rules treat everything beyond eight hours as overtime. A 12-hour shift is therefore eight normal hours plus four overtime hours at twice the rate.

Example: a daily wage of ₹800 for eight hours. On a 12-hour shift the worker is owed ₹800 + (4 × ₹200) = ₹1,600 for the day, not ₹800. If your contract quotes a single "12-hour duty" rate, check whether it covers the overtime at twice the rate before you quote or pay on it. The OSH Code also caps working hours, and some state rules differ, so check your shift pattern with your CA or labour consultant.

Does working on the weekly rest day count as overtime?

Under rule 6 of the Code on Wages (Central) Rules, 2026, a worker should not work on the rest day unless given a substitute rest day close to it. Where they work on the rest day and get a substitute day, they are paid for the rest day worked at the overtime rate. The rules set this out in detail, including a special case where the daily rate is worked out by dividing the monthly rate by 26. Read rule 6 or ask your consultant before you settle a rest-day dispute.

HaazriPro works this out every month from your attendance, for every staff member and site. Start 30-day free trial  →

How should overtime be recorded?

Overtime is only payable if you can show it. Record the hours against the date they were worked, not as a monthly lump sum. The 2026 central rules require a register of wages, overtime and deductions (Form XV of the OSH rules), and the attendance register-cum-muster roll records overtime hours too. See the registers a contractor must keep.

• Note the start and end time of the extra hours each day.
• Get overtime approved by the site in-charge if you bill it to the client.
• Pay it with the wages for that wage period. The rules say overtime is paid at the end of each wage period.
• Show the overtime hours and pay separately on the salary slip.

HaazriPro records overtime hours against the day they were worked, so the hours are already on record when you work out the month's pay.

Can you bill overtime to the client?

Only if the contract says so. Many manpower contracts bill overtime hours at an agreed hourly rate. Set that rate so it covers the double-rate wage plus your statutory costs and margin, otherwise every overtime hour loses money. See how to bill a client for manpower.

How does overtime fit into the month's salary?

Overtime is one line in the salary calculation, added after the days worked and before deductions. Read our complete guide to calculating salary for contract staff, and see how half-days and the 26 vs 30 day divisor affect the day rate that overtime is built on.

Sources

• Code on Wages, 2019, section 14 (India Code)
• OSH Code, 2020, sections 25 and 27 (Ministry of Labour)
• Code on Wages (Central) Rules, 2026, rules 5 and 6, G.S.R. 343(E) (eGazette)
• OSH and Working Conditions (Central) Rules, 2026, rule 69, G.S.R. 345(E) (eGazette)
• PIB, 21 Nov 2025: the four Labour Codes made effective

This guide explains the rules in plain language. It is not legal or tax advice. Laws and rates change, so check the overtime rules that apply to your establishment and state with your CA or labour consultant before you act on it.