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Sameer (Process Executive)     25 July 2012

Overtime w.r.t dearness allowance


My question is regarding overtime. In the Factories Act, the amount which is used for overtime is basic wages and "allowance"

I want to know what kind of 'allowance' is considered?

My company does not give dearness allowance, which is fine, because being a private company it does not necessarily need to give a dearness allowance, instead it gives "special allowance"


Coming to the issue, for overtime calcuation it is using basic + (house rent allowance + conveyance allowance), which looks pretty weird for overtime. There seems to be no logic to have HRA and conveyance for OT.

I think these 'allowances' are given instead of 'special allowance' which is what we are entitled to..  I may be incorrect in my interpretation. Experts please let me know what is correct.

Thank you

Reference of the Act:

The Factories Act, 1948 (Act No. 63 of 1948), as amended by the Factories (Amendment) Act, 1987 (Act 20 of 1987)


CHAPTER VI.- Working Hours of Adults: Section 59

1) Where a worker works in a factory for more than nine hours in any day or for more than forty-eight hours in any week, he shall, in respect of overtime work, be entitled to wages at the rate of twice his ordinary rate of wages.

 (2) For the purposes of sub-section (1), "ordinary rate of wages" means the basic wages plus such allowances, including the cash equivalent of the advantage accuring through the concessional sale to workers of food grains and other articles, as the worker is for the time being entitled to,  but does not include a bonus and wages and wages for overtime work.  


 4 Replies

Vinod kashyap (Advocate & Legal advisor)     26 July 2012

Recently Bombay high court passed a judgement that overtime shall be paid on gross sallary (wages+allowncess) not on basic wages.

subramanya (Sr. Executive)     27 July 2012

Dear Mr. Vinod,


Can you please arrange the order copy of the same.

Subramanya HL

jaykumtekar (Legal Advisor)     30 July 2012

Dear Vinod,

The judgement could be of immense help for all.  Kindly quote the judgement and which journal it has been reported.

OR if you are having that judgement then kindly send us the judgement.  We will be highly obliged.

My mail i.d. is :

Thanks and regards

Jay Kumtekar.

Sameer (Process Executive)     14 August 2012

I think my question has not been understood here..

I agree overtime should be paid according to basic wages and allowance. But which allowance is not specified.

My company does not give 'dearness allowance', but has 'special allowance' and the regular 'conveyance allowance' and 'house rent allowance'. Now what these guys are doing is, for calculating overtime instead of considering 'special allowance' they are giving 'conveyance and house rent allowance', which I find is ridiculous! The reason I see for doing this is conveyance + house rent allowance is less than special allowance.

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