Regarding overtime rate

santosh (Querist) 25 April 2011 This query is : Resolved
A PSU company made an agreement with its labour union to pay its workers overtime rate at 45/- per hour. the agreement dates back to around 7 years back. No new agreement has come into existence since then. The overtime rate otherwise calculated as per factory act comes to around 400/- per hour. There is a contract ending clause where the contract can be broken but other employees who do not do overtime otherwise eligible for an incentive of around 10000/- per month will be affected.
Can the PSU taken to court for violating factory act. If say whether by individual employee or the labour union

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R.Ramachandran (Expert) 25 April 2011
I do not know where from you are arriving at a figure of Rs. 400/- per hour. If it is true, it works to Rs. 3200/- per 8 hour day and nearly Rs. 90000 and odd per month. Therefore better recheck the figures.
Further more, when there is an existing agreement, then the recognized labour union has to renegotiate with the Management and enter into an agreement in this regard.

santosh (Querist) 25 April 2011
For a salary of 40000/- per month the hourly salary comes to 40000/25*8 ( as per 25 working days per month & 8 hours per day)= 200
Here for calculation of overtime the rate is multiplied by 2 & hence the amount of 400

R.Ramachandran (Expert) 25 April 2011
According to you one had to get twice the hourly rate as overtime.
That is why, when Rs.200/- is the normal hourly rate, for overtime it should be Rs. 400/- per hour.
If that is the logic, please confirm that when 7 years back when hourly rate of overtime was Rs. 45/- the normal hourly working hour rate is Rs. 22.50 or say Rs. 25/-. That means Rs. 200 per day, which works out to only Rs. 6000 per month. Do you mean to say that a person who was earning Rs. 6000 per month 7 years back is now getting Rs. 40000 (i.e. more than 600%) per month now?

Guest (Expert) 26 April 2011
It is the fault of your union which has not taken care of the inflation clause in the agreement seven years back. You can however seek redressal from the labour courts as per the daily wage/hourly rates wages fixed by the labour departments of the concerned states. Otherwise your workers union can compel the management to revise overtime rates as per the rising cost with reference to consumer price index or the existing wage structure, whichever can be feasible.

Kirti Kar Tripathi (Expert) 26 April 2011
It is settled position of law, the benefits of overtime wages can not be less than from rate of overtime wages as prescribed in law i.e. Factories Act or Shop & Commercial Establishment Act as the case may be. Any agreement contrary to the provision of aforesaid i.e. any benefit less beneficiary to the said provisions of the said Act is illegal thus said provision can can be challenged or the employees can claimed benefits in accordance with provisions of the said Act.

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