New Delhi : Employees working beyond their scheduled shifts will now be paid double for overtime. Under the updated Code on Wages, effective since April 1, 2026, every extra minute worked after normal hours must be documented and compensated.
The new rules, rolled out with the aim to simplify rules and protect basic rights, require employers to pay double the ordinary rate for overtime in most jobs. This means, one hour of extra work now calls for two hours’ worth of pay.
A standard workweek is 48 hours. Work beyond that qualifies for overtime. Daily work, including breaks, may go up to 12 hours if weekly limits are met, as per the code. The rules also change how overtime is counted. Small extra periods are rounded up. For example, 15-30 minutes of extra time counts as 30 minutes of overtime.
States can set quarterly overtime caps. Across a three-month period, additional hours are limited to around 125-144, depending on local rules. Also, pay timelines are tighter. If an employee leaves or is terminated, any unpaid wages — including overtime — must be settled quickly under the code.
The wider labour reform has merged nearly three dozen old laws into four modern codes. The aim is to make compliance simpler and improve worker protections, though some payroll changes have been challenging for both firms and employees. Basic pay must make up a larger share of total compensation, which raises statutory contributions like provident fund and gratuity. This can compress take-home pay even when the cost-to-company rises.
For workers, the key takeaway is to understand how pay is defined and calculated. Overtime is more clearly regulated. At the same time, salary structure shifts may mean headline increases don’t always boost monthly cash in hand.
Sanchita Tuli, HR Director, Great Lakes Institute of Management Gurgaon, said, “India’s new labour codes will slightly reduce monthly take-home salary as basic pay must be at least 50 per cent of CTC, increasing PF and gratuity deductions. However, long-term earnings improve due to higher retirement benefits.”
She added, “For blue-collar workers, stricter overtime rules (paid at 2X wages) can significantly boost monthly income, provided compliance is enforced. Flexible working hours (up to 12-hour shifts within a 48-hour week) may increase earning opportunities but also fatigue risks. For white-collar employees, overtime benefits are limited, so longer workdays may not translate into higher pay, leading to neutral or slightly lower take-home but better long-term financial security.”
It must be noted that labour rules are subject to the laws in your state. The new labour rules, rolled out by the Centre, will apply in your state only if your state government implements it.
