Under the Code on Wages, 2019 and the OSH Code, 2020, the rules regarding Overtime (OT) have been harmonized. The practice of offering “Compensatory Off” (Comp-Off) in lieu of monetary payment for overtime is legally restrictive under the new regime.

1. The Calculation Mandate

The Code explicitly states that if an employee works beyond the daily (8 hours) or weekly (48 hours) limit, they are entitled to overtime wages at twice the rate of ordinary wages.

2. No More “Comp-Off”?

Many IT/ITES companies follow a practice of granting leave (Comp-Off) instead of paying for extra work. Under the new Codes, this is not a valid substitute for statutory overtime payment, except where specific state exemptions apply.

• Factory/Industrial Workers: Comp-off is not permitted in lieu of OT wages.
• Commercial Establishments: Depends on specific State Rules, but the Central Code favors monetary compensation.

3. Consent is Mandatory

The OSH Code introduces a crucial safeguard: Overtime cannot be forced. Employers must obtain the consent of the employee for overtime work. While the format of consent is not prescribed, having a documented policy or email confirmation is advisable to avoid disputes.

4. Impact on “Managers”

A common grey area is whether “Managers” or “Supervisors” are eligible for OT. The Code excludes employees in “supervisory capacity” drawing wages exceeding a specific ceiling (e.g., ₹18,000 or as notified). However, misclassifying a regular employee as a “Manager” to avoid OT payment is a compliance risk.