Overtime — Define Overtime Rules

What this tab does: Set the maximum overtime limits (caps) and the payment calculation rules — how much an employee can be paid, what percentage, and under which payroll component it appears.

When this tab appears: Only when at least one day type (Week Day, Week Off, or Holiday) is set to "Overtime" as the compensation type. If all day types use Compensatory Off/Pay, this tab is replaced by the Compensatory Off tab.

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What You'll See

The Overtime tab has a compact form with settings for overtime caps, payment basis, and payroll mapping. The heading reads "Overtime — Define overtime rules".

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Fields on This Tab

⏱️ Maximum Overtime Hours (required)

Set the cap on how many overtime hours an employee is allowed.

Input: A number in the "Hours" field, followed by a period selector:

Period	What It Means
Day (default, highlighted in blue)	Maximum OT hours allowed per single day
Week	Maximum OT hours allowed per week (cumulative across all days)
Month	Maximum OT hours allowed per month (cumulative)

Example configurations:

• 4 hours per Day → Employee can claim max 4 hours of OT in any single day
• 20 hours per Week → Even if the employee works 8 extra hours on Monday, they only have 12 hours remaining for the rest of the week
• 40 hours per Month → Monthly cap regardless of daily distribution

💡 Tip: Setting a Day cap is the most granular control. A Month cap is more flexible for employees with irregular overtime patterns.

⚠️ What happens when the cap is reached? Any overtime hours beyond the cap are either ignored or included based on the "Extended working beyond overtime should be" setting on the Week Day tab.

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🔄 Same policy for all days (week day, week off, holiday)

A toggle switch (default: ON / blue)

State	What It Means	What Changes
ON	Same maximum hours and payment settings for ALL day types	Shows a single set of payment fields (below)
OFF	Different caps and rates per day type	Expands into separate sections for each day type that uses overtime

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When "Same policy" is ON (Default View)

A single set of fields applies to all day types:

💵 Overtime payment based on

Choose the calculation method for the overtime rate:

Option	Calculation Method	Field Changes
Fixed	Flat amount per hour — same for everyone	Shows *"Rate of payment hourly " field
% Of Basic	Rate derived from a percentage of Basic salary	Shows *"Rate of payment % " + *"Hours to consider full day " fields
% Of Gross	Rate derived from a percentage of Gross salary	Same as % Of Basic
% Of CTC	Rate derived from a percentage of Cost to Company	Same as % Of Basic

🔄 Important — Selecting "Fixed" vs a percentage option changes the fields shown!

• Fixed → Shows "Rate of payment hourly" (a flat rupee amount per hour)
• % Of Basic/Gross/CTC → Shows "Rate of payment %" AND "Hours to consider full day * ___ Hours for per hour rate"

📊 Rate of payment % (or "Rate of payment hourly" if Fixed)

For percentage options:

• 100 = 1x the hourly rate (standard overtime)
• 150 = 1.5x the hourly rate (time and a half)
• 200 = 2x the hourly rate (double time)

💡 Indian labor law reference: The Factories Act, 1948 typically requires overtime at 2x (200%) the ordinary rate.

For Fixed: Enter a flat rupee amount per overtime hour.

🕐 Hours to consider full day (only for % options)

Enter how many hours constitute a full working day. This is used to derive the per-hour rate from the salary component.

📝 Formula: Per-hour OT rate = (Monthly Salary Component ÷ (Total Working Days × Hours to Consider Full Day)) × Rate of Payment %

📋 Show overtime payment in monthly payroll under

Select the pay element (salary component) under which overtime payments will appear on the employee's payslip. Click the dropdown to see available pay elements configured in your Payroll module.

⚠️ Important: The pay element must already be created in Payroll configuration. If the dropdown is empty, create an overtime component in the Payroll module first.

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When "Same policy" is OFF (Expanded View)

When you turn the toggle OFF, separate sections appear for each day type that has "Overtime" configured. Only day types set to "Overtime" (not Compensatory Off) appear here.

For example, if Week Day = Comp-Off, Week Off = Overtime, Holiday = Overtime, you'll see:

Week Off Section

Field	Purpose
Overtime payment based on	Fixed / % Of Basic / % Of Gross / % Of CTC
*Rate of payment hourly * (or Rate of payment % )	Depends on Fixed vs % selection
**Hours to consider full day ***	Only for % options
Show overtime payment in monthly payroll under	Pay element dropdown

Holiday Section

Same fields as Week Off, configured independently. This lets you set different rates — for example, 1.5x for Week Off and 2x for Holiday.

💡 Each section is fully independent. You can set Fixed for Week Off but % Of Basic for Holiday, with different rates and pay elements for each.

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Action Buttons

Button	Color	What It Does
Reset	Red	Clears all settings on this tab
Previous	Grey/Blue	Goes back to the Holiday tab
Next	Blue	Proceeds to the next tab (Compensatory Off or Who Gets It)

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Step-by-Step: Setting Overtime Rules

1. Enter maximum OT hours — Type the cap number
2. Choose the period — Day, Week, or Month
3. Decide if same policy for all days — Toggle ON for uniform rules, OFF for per-day customization
4. Select payment basis — Fixed, % Of Basic, % Of Gross, or % Of CTC
5. Enter rate — Flat amount (Fixed) or percentage (% options)
6. Enter hours to consider full day (only for % options)
7. Select payroll element — The salary component for OT payment on the payslip
8. If toggle is OFF: repeat steps 4-7 for each day type section
9. Click Next to proceed

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FAQs

Q: Can I set both a daily cap and a monthly cap? A: The form allows one period selector at a time (Day OR Week OR Month). To enforce multiple caps, consider using a daily cap here and managing secondary limits through organizational policy.

Q: What happens if "Rate of payment %" is set to 0? A: No overtime payment will be calculated. This would only make sense if you're using Compensatory Off instead of cash payment.

Q: Why do I see only "Week Off" and "Holiday" sections when "Same policy" is OFF? A: Only day types with "Overtime" compensation appear here. If Week Day is set to "Compensatory Off/Pay", it won't have a section on this tab — its rules go to the Compensatory Off tab instead.

Q: Can I change the payroll element after the policy is active? A: Yes, but changes apply from the next payroll cycle onward. Previously processed payslips are not retroactively updated.

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Troubleshooting

Problem	Possible Cause	Solution
Payroll dropdown is empty	No overtime-related pay elements configured	Go to Payroll Settings → Pay Elements and create an overtime component
Rate of payment shows error	Non-numeric or negative value entered	Enter a positive number (e.g., 100, 150, 200)
"Same policy" toggle doesn't reveal extra sections when OFF	Page loading delay or no day types set to Overtime	Wait a moment or scroll down. If no sections appear, check that at least one day type is set to Overtime
"Hours to consider full day" field missing	"Fixed" is selected as payment basis	This field only appears for percentage-based options (% Of Basic/Gross/CTC)