BHARAT HEAVY ELECTRICALS LIMITED (B.H.E.L.

) HEAVY ELECTRICAL EQUIPMENT PLANT Ranipur, Haridwar

Overtime Wages under Factories Act, 1948

Prepared by: Shikha Widge

Overtime Wages under Factories Act, 1948 Relevant Provisions of Factories Act, 1948 The Factories Act, 1984 was enacted after repealing the Factories Act of 1934, as the earlier Act was found to be inadequate to meet the demands of the times. In view of the large and growing industrial activities in the country, a radically overhauling of the Factories Act was essentially called for. The Factories Act 1948 was enacted with an objective to consolidate and amend the law regulating labour in factories and also to ensure good working conditions. Keeping this objective in view certain provisions pertaining to weekly hours of work, weekly holidays, extra wages for overtime etc. were given importance in the new act. Some of the important provisions, with their scope and objective are discussed in detail below: 1. Section 51: Weekly Hours: Section 51 provides that no adult worker shall be (i) (ii) (iii) (iv) required to work, or allowed to work, in a factory for more than 48 hours in a week.

In National Textile Corporation Ltd. Unit Mahalaxmi Mills, Beawar v. Labour Court, Jaipur,1 Rajasthan High Court held that Section 51 prescribes a ceiling or an outer limit of working hours of an adult worker in a week. It therefore puts an embargo on the employers right to prescribe total working hours for a week. 2. Section 52: Weekly Holidays: Section 52 provides for weekly holidays. Sub-section (1) prohibits that no adult worker shall be: (i) (ii) (iii) required to work in a factory, or allowed to work in a factory on the first day of the week unless (a) he has or will have a holiday for a whole day on one of the 3 days immediately before or after the said day; and (b) it is obligatory upon the manager of a factory before the first day of the week or a substituted day whichever is earlier (i) to deliver a notice to the office of the Inspector of his intention to require the worker to work on Sunday or the substitute holiday, (ii) to display a notice to that effect in the factory; (c) however no substitution shall be made which will result any worker working for more than 10 days consecutively without a holiday for a whole day.

1997 LLR 518; 1996 LLR31 (High Court of Rajasthan)

Sub-section (2) provides that no notice under sub-section (1) may be cancelled by a notice to the Inspector and a notice displayed in the factory not later than the day before the Sunday or the holiday to be cancelled whichever is earlier. Sub-section (3) provides that where as worker works in a factory on Sunday and had a holiday on one of the 3 days immediately before it that Sunday shall for the purpose of calculating his weekly hours of work, be included in the preceding week. (A) Scope of Clauses (a) and (b) of sub-section (1):

Clause (a) of sub-section (1) of section 52 prescribes the condition on which the workmen may be required to work in a factory on a Sunday. The condition is that the workmen must be given a holiday for a whole day on one of the 3 days immediately before or after the said day i.e. to say Sunday. The holiday, which is substituted for Sunday is called the substituted day. Clause (b) of sub-section (1) of section 52 prescribes the procedure to be adopted for making workmen work on a Sunday and the proviso thereto prescribes limits in the matter of substitution of holiday is to the effect that no substitution shall be made which would result in any worker working for more than 10 days consecutively without holiday for a whole day.2 (B) Fixation of holiday in lieu of a holiday declared working day:

In Motor and Machinery Manufacturing Ltd. v. State of West Bengal & Ors.3, First day of the week, ie Sunday was observed as a weekly-off in the factory. The management of the factory declared 23rd March, 1959 as a holiday, 22nd March was a Sunday and 24th and 25th of the month were holidays on account of festival. In the next month 10th April and 15th April were also holidays on account of idul-fitr and Bengal New Year Day respectively. The management declared 12th April, a Sunday as a working day in place of 23rd March declared as holiday. The workmen who were paid on the daily wages basis raised a dispute that they were entitled to their wages for 23rd March, which was declared as a holiday as the management had not complied with the provisions of section 52 in declaring 23 rd March as a holiday and 12th April as a working day. The Industrial Tribunal accepted the contention of the workmen. It directed payment of wages to workmen for 23rd March. Thereupon the management filed a Writ Petition for quashing the award. The High Court dismissed the petition. The court held that if Sunday 12th April was to be converted into a working day, then section 52 (1)(a) required that the worker must get a substitute holiday on one of the 3 days immediately before or after the Sunday. No day was substituted within 3 days before or after the Sunday on which the workers were required to work. 10th April and 15th April which were festival holidays could not be considered to be substituted holidays for such purpose. The management could not be allowed to exploit ordinary holidays of the year for the purposes of substitution under section 52 (1) (a). Neither 23rd March could be declared as substituted holiday for Sunday 12th April declared as working day by the management as it was not a day, 3 days immediately before or after Sunday the 12th April, 1959.
Motor and Machinery Manufacturing Ltd. v. State of West Bengal & Ors. (1962) 2 LLJ 59 Supra note 2

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(C) Principle underlying Section 52: The principle is to provide a weekly holiday for workers and such day is the first day of the week, i.e. Sunday. But, if for some special reason it becomes necessary to make Sunday the working day a substituted holiday is made compulsory. (D) Scope of section 52(1) (a) and (b): The opening words of sub-section (1) of section 52 indicate a prohibition from requiring or permitting an adult worker to work in a factory on the first day of the week. The prohibition is, however, lifted if steps are taken under Clause (a) and (b) of that section. It would therefore follow that where something is done in breach of prohibition enacted by sub-section (1) of section 52, both the manager as well as the occupier will be liable for penalties prescribed in that section. 4 Further in Motor and Machinery Manufacturing Ltd.5 case, the Calcutta High Court interpreted the provisions to mean: If the worker has an existing or an already declared holiday in the calendar within 3 days immediately preceding or succeeding the Sunday on which he is to work, that it is not essential to give the workers as substituted holiday on one of the 3 days before or after Sunday, but it may be given on any other working day; but it there is no such existing or declared holiday within those 3 days or succeeding the Sunday than a substituted holiday must be given within those specified day in as much as the object of the enactment is to give some rest or respite to the workmen near about the Sunday on which he is called upon the work. (E) Substituted Holidays, under section 52: In Allcoyn Employees Union v. Hyderabad Allcoyn Ltd.6, Andhra Pradesh High Court has held that the effect of the proviso to section 52 is to confine the option of employer to declare a substituted holiday only in lieu of any festival holiday and not any of the national holidays. The court also held while interpreting the provisions of AP Factories Establishments (National Festival and other holidays) Act, 1974 that in the absence of a definition of national holidays and in view of the obligation of the court to give effect to every enacted part of Statute, it can be said that the four specified holidays shall be national holidays and the other four shall be festival and other holidays. Thus, according to the court the option of an employer to declare, with consent of employees, under intimation to the Govt., a substituted holiday in lieu of any of the festival holiday was confined only to the latter category and not the former. Thus, the substituted holiday on account of holi in lieu of the national holiday would be illegal.

John Douglas Keith Brown v. State of Bengal (1965) 1 LLJ 419 (SC) Supra note 2 6 (1992) Lab IC 1094
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3. Section 59 of the Factories Act provides for overtime for work done in excess of the regular working hours: (A) Section 59: Extra Wages for overtime provides: All employees who are deemed to be workers under the Factories Act or under the Minimum Wages Act are entitled to it at (overtime) at twice the ordinary rate of their wages for the work done in excess of 9 hours on any day or for more than 48 hours in any week. The ordinary rate of wages have been defined as the basic wage plus such allowances including the cash equivalent of the advantage accruing through the concessional sale to workers of foodgrains and other articles as the workers are for the time being entitled to, but not including a bonus. Compensatory allowances as well as the dearness allowance are to be taken into account in computing compensation for overtime work. However, HRA will be excluded for calculation of overtime payment if accommodation is given to the factory worker by his employer. There is no uniformity in the period of employment with reference to which overtime is calculated. Where weekly working hours have been prescribed overtime is normally computed on weekly basis. Under the Factories Act overtime allowance has to be paid on daily or weekly basis, ie for work in excess of 9 hrs in a day or for more than 48 hrs in a week. The total number of hrs of overtime shall not be exceed 50 for any period of three consecutive months, beginning on 1st Jan, 1st July, 1st Oct. It is generally observed that in cases, where order to work overtime, is within Statutory limits, the employees should abide by the order and if they do not do so, it will be misconduct. (B) Scope of Section 59: Section 59 creates an obligation on the employer to pay extra wages for overtime if the worker works for more than 9 hours in any day or for more than 48 hours in any week at twice the ordinary rate of wages. From combined reading of section 51 and 59, it cannot be taken to mean that an employer has an absolute right to take work from a worker upto maximum period of working hours in a week without payment of extra wages of overtime, even the prescribed normal working hours are less than the maximum hours permissible under section 51. If the prescribed normal working hours in a factory are less than the maximum permissible working hours for a week, the workers would be entitled to get extra wages would be entitled to get extra wages for overtime if he works for more than the prescribed working hours.7 The expression overtime is not defined either in the Factories Act, 1948 or the Industrial Disputes Act, 1947 but it in no uncertain terms means in the context of working hours the period in excess of the prescribed hours. The Supreme Court in M/s Philips India v. Labour Court8 while examining the provisions of Tamil Nadu Shops and Establishment Act, 1947 held that even though the expression overtime is not defined in the Act, its connotation is unambiguous and in no uncertain term it means in the context of working hours, the period in excess of the working hours.
Supra note 1. (1985) 2 LLJ 33

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Before a worker becomes entitled to extra wages in respect of overtime work with impunity the necessary permission and exemption under sections 64 and 65 should have been obtained from appropriate authorities by the manager of the factory. The Supreme Court in Union of India & Ors. v. Suresh C. Baske & Ors.9, held that for computing the overtime allowance, HRA not entitled to be included as part of the ordinary rate of wages. The respondents are not entitled to HRA and as such the same cannot be included while determining the ordinary rate of wages, because govt. accommodation has been provided. The Supreme Court has held that HRA will be excluded for calculation of overtime payment, if accommodation is given to the worker. There is no uniformity in the period of employment with reference to which overtime is calculated. Where weekly hours have been prescribed, overtime work is normally computed on weekly basis. Under the Factories Act, overtime allowance has to be paid on daily or weekly basis i.e. for work in excess of hours in a day or for more than 48 hours in a week. In one case, it has been held that when an employer has fixed the normal working hours less than the prescribed working hours and subsequently when he unilaterally increases them, then he shall be liable to pay overtime. (C) Overtime-Restriction of: The actual hours of work for the workers must correspond to the number of hours of such work as notified. Besides, a register of workers is to be maintained in the factory. Any working hours extended beyond the hours of work announced would only be permissible for workers who are covered by the rules of exemption, as required under sections 64 and 65 of the Factories Act. In regard to overtime work, the following maximum limit of work inclusive of overtime is to be observed (i) (ii) (iii) the total no. of hours of work in any day shall not exceed 10; the spread over inclusive of intervals for rest shall not exceed 12hrs on any day; and the total no. of hours of overtime shall not exceed 50 for any period of three consecutive months, beginning on 1st Jan, 1st April, 1st July and 1st Oct.

In one case it has been held that a worker is required to work on paid holidays is entitled to overtime at thrice the rate of wages.10 (D) Festival holidays under Factories Act: There is no provision under the existing Factories Act 1948 and rules framed thereunder, for grant of festival or national holidays. Therefore, there is no legal obligation under these legislations to give festival holidays to workers. However, in case, there is a State legislation on this subject, similar to the Punjab Industrial Establishments (National and Festival Holiday, casual and sick leave) Act, 1965, as extended the workers are entitled to National and Festival holidays in accordance with the provisions of the legislation applicable in the State/Union Territory.
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JT 1995 (9) SC 661 1977 WLN (UC) 90 (Raj.)