Free policy template · Word

Overtime Policy

An overtime policy explains who is eligible for overtime, how extra hours are approved and recorded, the rate at which they are paid and the limits that protect employee health. HR issues it to supervisors and staff, especially in plants, warehouses, retail and service teams that work beyond normal hours.

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[Company Logo][Company Name]

OVERTIME POLICY

Policy No.:: [Reference Number]
Version:: [Version Number]
Effective Date:: [Date]
Policy Owner:: Human Resources

1. Purpose

This policy sets the rules for approving, recording and paying overtime (OT) at [Company Name] so that extra work is planned, fairly compensated and kept within legal and safe limits.

2. Scope

It applies to all employees and workers at [Work Location] whose role and wage level make them eligible for overtime under applicable law. Employees in managerial, supervisory or administrative grades [Grade List] are not paid OT but may receive compensatory off as set out in clause 4.6.

3. Definitions

Normal working hours: [Number] hours a day and [Number] hours a week as per the employee's shift.
Overtime: approved work done beyond normal daily or weekly working hours.
Ordinary rate of wages: as defined under applicable law, used to calculate OT pay.

4. Policy

OT is worked only when there is a genuine business need and has been approved in advance in writing.
OT is paid at [Number] times the ordinary rate of wages, or the rate required by law if higher.
No employee may work more than [Number] hours of OT in a day, [Number] in a week or [Number] in a quarter.
A minimum rest of [Number] hours is given between the end of OT and the next shift.
OT is voluntary; refusal for a genuine reason will not result in adverse action.
Eligible non-OT staff who work on a weekly off or holiday receive one day's compensatory off, to be availed within [Number] days.

5. Procedure

The supervisor raises an OT request stating employees, reason and expected hours before the OT begins.
The Department Head approves requests; OT above [Number] hours per employee per month also needs approval from the Plant/Branch Head.
Actual OT hours are captured through [biometric / timesheet] and entered in the OT register.
The supervisor verifies the register weekly and forwards it to HR by the [Number] of each month.
Payroll pays approved OT with the next monthly salary and shows it separately on the payslip.

Date	Employee Name	Employee ID	Normal Hours	OT Hours	Reason	Approved By
[DD/MM/YYYY]	[Employee Name]	[Employee ID]	[Number]	[Number]	[Reason]	[Name]
[DD/MM/YYYY]	[Employee Name]	[Employee ID]	[Number]	[Number]	[Reason]	[Name]
[DD/MM/YYYY]	[Employee Name]	[Employee ID]	[Number]	[Number]	[Reason]	[Name]

6. Responsibilities

Supervisors: plan workloads, seek approval and verify OT records.
HR: maintain the OT register, monitor limits and report repeated excessive OT to management.
Payroll/Finance: calculate and pay OT accurately and on time.
Employees: work OT only when approved and record hours truthfully.

7. Non-compliance

Unapproved OT may not be paid unless it was required by the supervisor. False recording of hours, or a supervisor forcing OT beyond limits, will be treated as misconduct under the Disciplinary Policy.

8. Review & Approval

HR will review this policy every [Number] months and whenever wage or working-hour rules change.

Prepared by
[HR Name]
Human Resources

Approved by
[Authorised Signatory]
[Designation]
Date: [Date]

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What this template includes

Eligibility rule — separates OT-eligible workers from supervisory or managerial staff
Prior written approval — stops unplanned OT from inflating payroll
OT rate clause — payment at the rate required by applicable law, with [Number] placeholder for any higher company rate
Daily, weekly and quarterly caps — keeps hours within legal and health limits
OT register and timesheet — evidence for wage audits and inspections
Payment timeline — OT paid with the next salary cycle

When to use it

Production or dispatch peaks regularly push workers beyond normal daily hours
Supervisors approve OT informally and payroll receives disputed hour claims
An inspection or audit asks for your overtime register and approval trail
Deciding whether managerial staff get OT pay or compensatory off instead

How to customise this template

1List the departments and grades that are eligible for OT
2Insert the OT rate and limits after checking the rules notified for your state and establishment type
3Name the approving authority for each level of OT (supervisor, plant head)
4Attach your OT request form and register format as annexures
5Add women's night-shift safeguards if OT may extend into night hours

HR tips

Record OT through the same attendance system as normal hours so the data matches
Do not offer comp-off in place of mandatory OT wages for workers entitled to statutory overtime pay
Watch for the same few employees doing heavy OT every month — it signals understaffing and fatigue risk
Get the employee's consent for OT and never make it a condition of keeping the job

Overtime rates, daily and quarterly limits differ by law and by state. Verify the figures against the Labour Codes, state rules, your Shops & Establishments registration or Factories licence, and take legal advice where unsure.

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Frequently asked questions

What is the overtime rate in India?+

For workers covered by labour law, overtime is generally paid at twice the ordinary rate of wages, but the exact definition and coverage depend on the applicable code and state rules. Check your notified rules before fixing the rate in the policy.

Are managers entitled to overtime pay?+

Employees in managerial or supervisory roles are often outside statutory overtime provisions, depending on the law and their wage level. Many companies give them compensatory off instead — state this clearly in the policy.

Can an employer make overtime compulsory?+

Overtime should be worked with the employee's consent and within legal limits. The policy can say that reasonable OT may be requested during peak periods, but refusal for genuine reasons should not lead to punishment.

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[Company Logo][Company Name]
HR POLICY MANUAL
Company:
[Company Name]
Document No.:
[Reference Number]
Version:
[Version Number]
Effective Date:
[Date]
Policy Owner:
[HR Name], Human Resources
Approved By:
[Authorised Signatory]
Chapter 1: Introduction
1.1 Purpose: This manual sets out the human resource policies, procedures and practices of [Company Name] so that employees are treated fairly and consistently and the company complies with applicable labour laws.
1.2 Scope: It applies to all employees on the company's rolls at all offices, plants and sites, including [Work Location]. Consultants, trainees and contract workers are covered where expressly stated.
1.3 Precedence: Where this manual conflicts with any law, certified standing order or individual appointment letter, the law and then the more favourable term for the employee will apply.
Chapter 2: Definitions
- Company: [Company Name] and its branches.
- Employee: any person employed on the company's rolls on a permanent, probationary or fixed-term basis.
- Reporting Manager: the person to whom an employee reports as per the organisation chart.
- HR: the Human Resources department or the person designated to perform the HR function.
- Wages / Basic Salary: as defined in the employee's appointment letter and applicable law.
Chapter 3: Employment
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Effective Date:
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[Reference Number]
Version:
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Effective Date:
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Policy Owner:
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[Reference Number]
Version:
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Effective Date:
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Policy Owner:
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[Reference Number]
Version:
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Effective Date:
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Policy Owner:
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