A supervisor in your Gurgaon warehouse asks three pickers to stay back till 11 pm to clear a client’s urgent dispatch. Nobody signs anything, nobody’s asked if they mind, and payroll pays “extra hours” at the normal rate next month because that’s how it’s always been done. Under the rules that took effect this year, every part of that sentence is a compliance problem — the missing consent, the missing paperwork, and the wrong rate.
If you’ve been calculating overtime the way you did in 2023, it’s worth stopping and checking the math again. The Occupational Safety, Health and Working Conditions (OSH) Code, 2020 came into force on 21 November 2025, and its Central Rules — the ones that actually put numbers on paper — were notified on 8 May 2026. Together they’ve replaced the Factories Act’s overtime framework with a new one, and the changes aren’t cosmetic.
TL;DR — Overtime Rules India 2026
- Overtime still triggers beyond 8 hours a day or 48 hours a week, and is still paid at twice the ordinary rate of wages.
- The national quarterly overtime cap under the OSH Central Rules, 2026 is 144 hours — but several states (Gujarat, Maharashtra, Uttarakhand) still run a stricter 125-hour cap, and many others cap it far lower.
- Overtime is now consent-based. An employer cannot compel it, and for women working past 7 pm, written consent plus safe transport is mandatory.
- Because the Code on Wages forces basic pay to at least 50% of gross, the “ordinary rate of wages” used to compute overtime has gone up for many salary structures — so overtime now costs employers more per hour, even though the cap is more generous than the old 75-hour Factories Act limit.
What changed: the OSH Code replaces the old Factories Act regime
Overtime in India is now governed by Section 26 of the OSH Code, 2020, read with the OSH (Central) Rules, 2026. This single code has folded in 13 older laws — the Factories Act 1948, the Contract Labour Act, the Mines Act, the Motor Transport Workers Act, and others — that used to govern working hours separately for different sectors.
For an HR manager, the practical upshot is this: instead of checking the Factories Act for your factory floor and a different state Shops & Establishments Act for your office staff, most establishments with 10 or more workers now read from one central rulebook, with state rules layered on top where they still apply. The days, hours and rest logic is broadly familiar — 8 hours a day, 48 hours a week, one weekly off — but the overtime ceiling, the consent requirement, and the wage base used for calculation have all moved. If you’re also revisiting other statutory numbers this quarter, our professional tax calculator and PF/ESI calculator reflect the same set of 2026 rule changes.
The overtime trigger and the 2x wage rule
Overtime is triggered the moment a worker crosses 8 hours in a day or 48 hours in a week — whichever calculation is more favourable to the employee. It is paid at twice the ordinary rate of wages, released within the same wage period rather than held back to year-end or exit.
How the daily wage and hourly rate are worked out
The OSH Code treats a month as 26 working days for computing the daily wage of a monthly-paid worker:
Daily wage = Monthly Basic + DA ÷ 26
Hourly rate = Daily wage ÷ 8
Overtime pay = Hourly rate × 2 × Overtime hours
Run your own numbers on our free overtime calculator — it applies this exact formula and shows the full breakup, so you don’t have to keep re-deriving it in Excel every payroll cycle.
The rounding rule that trips people up
The Code also standardises how odd minutes get counted, which matters when you’re processing hundreds of biometric punch-outs a month:
- 15 to 30 minutes of extra work → rounded up to 30 minutes
- More than 30 minutes → rounded up to a full hour
A worker who stays back 38 minutes past shift end is owed a full hour of overtime, not 38 minutes’ worth. Payroll teams that still round down to the nearest quarter-hour are underpaying, and it shows up the moment an inspector pulls your overtime register.
The 144-hour quarterly cap — and why your state may set a different number
This is the headline change. The OSH (Central) Rules, 2026 cap permitted overtime at 144 hours in a quarter nationally — nearly double the 75-hour ceiling that applied (with special exemption) under the old Factories Act. But labour is a concurrent subject, so states retain the power to set their own daily and weekly limits within this framework, and the actual cap you must follow depends on where your establishment sits.
| State | Max. overtime | Overtime rate |
|---|---|---|
| Haryana | 50 hours/quarter | 2x ordinary wages |
| Delhi | 6 hrs/week; 150 hrs/year | 2x ordinary wages |
| Maharashtra | 125 hours/quarter | 2x ordinary wages |
| Gujarat | 125 hours/quarter | 2x ordinary wages |
| Telangana | 144 hours/quarter | 2x ordinary wages |
| Karnataka | 50 hours/quarter | 2x ordinary wages |
| Tamil Nadu | 6 hrs/week | 2x ordinary wages |
| Rajasthan | 50 hrs/quarter | 1.5x ordinary wages |
| Uttar Pradesh | 50 hrs/quarter | 2x ordinary wages |
Rajasthan is the outlier worth flagging: it’s one of the few states still running a 1.5x overtime multiple rather than 2x, closer to the old Shops & Establishments rate our overtime calculator lets you toggle to. If you run payroll across multiple states, the safe default is to comply with whichever of the central and state rule is stricter for each location — never assume the 144-hour central number applies everywhere.
Consent is now mandatory — this is the part employees don’t realise
Under the old Factories Act, overtime was largely at the employer’s discretion, provided it stayed within the hour cap. That’s gone. Overtime under the OSH Code is consent-based: no worker can be compelled to work beyond normal hours, and once the quarterly ceiling is reached, no further overtime is permitted even if both sides are willing to continue.
For women working after 7 pm, the bar is higher still — written consent is mandatory, and the employer must arrange safe pick-up and drop transport. If your current overtime process is “the shift supervisor asks, the worker stays back,” you don’t have a consent trail, and that’s exactly the kind of gap an Inspector-cum-Facilitator visit is designed to catch.
The hidden cost: how the 50% wage rule raises your overtime bill
Here’s the part most compliance checklists skip. The Code on Wages, 2019 redefines “wages” so that allowances can’t swamp the basic component — basic pay must now be at least 50% of gross remuneration. A lot of Indian salary structures were built the opposite way, with a thin basic and fat allowances, precisely to keep PF, gratuity, and overtime costs down.
Since overtime is calculated on the “ordinary rate of wages,” and that rate is now anchored to a higher basic, every overtime hour costs more than it used to — even though the quarterly cap gives you more room to ask for it. If your CTC structures haven’t been rebuilt around the 50% rule yet, run them through our CTC salary calculator before you budget next quarter’s overtime spend; the basic-pay reset changes more than just this one number — it touches PF, gratuity and leave encashment too.
Common mistakes HR managers make with overtime right now
- Still using the old 75-hour or 50-hour Factories Act cap as gospel, when the applicable number now depends on your state and the OSH Central Rules.
- Calculating overtime on gross CTC instead of Basic + DA, which overstates or understates pay depending on the salary structure.
- Skipping the consent record — a verbal “can you stay back” doesn’t hold up if a labour inspector asks for the register.
- Rounding overtime minutes down instead of applying the 15/30-minute rounding rule, which quietly underpays workers every month.
- Not updating the overtime base after restructuring CTC to meet the 50% basic-pay rule, so the hourly rate used in payroll is stale.
- Treating comp-off as a blanket substitute for overtime pay, when factory workers and others covered under the OSH Code are legally entitled to wages, not just time off.
How to stay compliant: a quick checklist
- Confirm which law covers each category of your workforce — OSH Code for factories/industrial establishments, state Shops & Establishments Act for many offices and retail staff.
- Check your state’s specific quarterly overtime cap; don’t default to the 144-hour central figure without verifying.
- Get written consent before assigning overtime, and keep the record for at least a year.
- Apply the 15/30-minute rounding rule consistently across your attendance system.
- Rebuild your overtime base if you’ve restructured CTC to meet the 50% basic-pay rule.
- Maintain the overtime register (Form VIII) and display the work schedule notice as required under the OSH Code’s record-keeping provisions.
Manual tracking across all six of these gets messy fast, especially once you’re running shifts across states. This is the kind of thing that’s easier to get right when attendance and payroll talk to each other automatically — see how EZHRM’s attendance management software feeds overtime hours straight into payroll instead of a separate spreadsheet, and how our statutory compliance management module keeps overtime registers audit-ready alongside PF, ESI and PT filings.
Frequently Asked Questions
What is the overtime rate in India under the new labour codes?
Twice the ordinary rate of wages, under Section 26 of the OSH Code, 2020. A handful of states (like Rajasthan) still apply 1.5x under older Shops & Establishments rules for certain establishments.
What is the maximum overtime allowed per quarter in 2026?
The OSH (Central) Rules, 2026 set a national baseline of 144 hours per quarter. States can set stricter limits — Maharashtra and Gujarat cap it at 125 hours, while several smaller states cap it at 50 hours a quarter.
Can my employer force me to work overtime?
No. Overtime is consent-based under the OSH Code. Workers can decline, and once the quarterly cap is reached, no further overtime is permitted even with consent.
How is overtime calculated for a monthly-salaried employee?
Divide monthly Basic + DA by 26 to get the daily wage, divide that by 8 for the hourly rate, then multiply by 2 and the overtime hours worked. Our overtime calculator does this automatically.
Is overtime pay taxable in India?
Yes. Overtime pay is added to salary income and taxed at the employee’s applicable income tax slab rate — it isn’t treated as a separate, lower-taxed category.
Do the OSH Code overtime rules apply to all companies?
They apply to establishments with 10 or more workers, with a higher headcount threshold for what legally counts as a “factory.” Smaller establishments and many office/retail staff continue to be governed primarily by state Shops & Establishments Acts.
Get your overtime math right, every payroll cycle
Overtime compliance in 2026 isn’t hard, but it does need updating — the cap, the consent trail, and the wage base have all shifted under the new codes. Run your numbers through EZHRM’s free overtime calculator to see the correct payout instantly, or explore our full set of free HR calculators for gratuity, leave encashment, and CTC breakups. For more guides like this one, browse the EZHRM blog.
Sources: Occupational Safety, Health and Working Conditions Code, 2020 — PIB; Ministry of Labour & Employment.