Overtime and Overtime wages | Causes | Merits | Demerits | Control

What are Overtime and Overtime wages?

Overtime is beyond the normal working hours spent by workers to do the extra work or to complete the incomplete work. Overtime wages is the amount payable to the worker for the extra time spent by the worker to do extra and/or incomplete work.

Overtime and Overtime wages - Meaning, Causes, Advantages, Disadvantages, How to Control

Overtime and Overtime wages – Meaning, Causes, Advantages, Disadvantages, How to Control

As per the provisions of Factories Act, overtime wages is the double the usual rates of wages. If the Factories Act provisions are not applicable, there is an agreement between the employer and employee. Generally, more wage rate is paid for the overtime engagement. All overtime work should be authorized properly. A responsible person is appointed or nominated to look after the overtime work of the workers.

A worker is not permitted to do overtime work without getting prior permission from the responsible person. A separate register is maintained for overtime work. The register contains the details like date, name and token number of the worker, the department for which the work is completed, time of engagement, name of supervisor, signature of the worker and supervisor etc.

The overtime wages is calculated separately and approved by the responsible official before making the payment. Equal chance is given to all workers to do the work in overtime. At the same time, no worker is forced or compelled to work in overtime.

Causes of Overtime

The following are the two principal causes of overtime. They are briefly explained below.

1. Scheduling More Production

The production department can decide the volume of production than normal production hours when the workers requested to work in overtime. Likewise, the company can decide to sell more. units for which more production is required. Now, the workers are expected to work in overtime. In this way, production schedule is prepared to produce more units.

2. Rush Orders or Special Order or Urgent Order

The normal demand for the product can be fulfilled with the help of production carried on in normal working hours. In case of accepting rush order, special order or urgent order, the company is forced to employ its workers in overtime. If so, such accepted orders may be executed without any difficulty.

Advantages of Overtime

The following are the advantages of overtime.

1. More benefits are derived from the same resources like men and machine.

2. Timely execution of an order through overtime work.

3. Goodwill of the company is increased.

4. Regular customers can be satisfied.

5. Provide a basis for attracting new customers.

6. Extra earning is available to the existing employees by working overtime.

7. Market opportunity can be availed of.

8. Spoilage materials can be used in time.

9. Some materials may lose its quality due to storage. The company properly uses such materials.

Disadvantages of Overtime

The following are the disadvantages overtime.

1. It involves high labour cost. The reason is that overtime rate is higher than normal rate.

2. Workers are getting tired during normal working hours. Hence, productivity is decreased. It leads to less production in overtime.

3. The health of the worker is affected .

4. The workers may postpone the work to be performed in normal working hours in order to get more wages. The reason is that
overtime rate is high.

5. If the overtime work is not distributed evenly among all workers, there may be discontent in some section of the workers.

6. The overtime working involves incurring more indirect expenses.

7. The working life of the machine may be decreased due to continuous operation.

8. Overtime work once introduced cannot be easily discontinued due to workers’ resistance.

9. Continuous work for long periods leads to fatigue and defective output.

10. Workers may slow down their performance in normal working hours intentionally in order to force the management to sanction overtime.

11. It decreases productivity during normal working hours.

How to control overtime?

It is very difficult to avoid the overtime completely. However, the overtime may be reduced to some extent. The following steps may be taken to control the overtime

1. The responsible official should authorize the overtime working.

2. The efficient productivity during normal working hours should be maintained at any cost.

3. The overtime payment is prepared in department wise.

4. More workers may be recruited to avoid overtime work.

5. Training may be given to workers to increase their efficiency and avoid the need for overtime.

6. Causes of overtime should be analyzed through periodical report.

7. Productivity of concerned worker in overtime is compared with the productivity of same worker in normal working hours.

8. Sub-contract may be given to similar companies.

9. Temporary workers may be appointed to avoid overtime if special order or rush order is accepted.

10. If overtime is required due to shortage of machine, new machines may be bought to increase production during normal working hours.

Related Post

What is Overhead? | Meaning | Importance | Classification  What is Overhead? Overhead is the cost of material, labour and expenses, which cannot be easily identified with any, job or process. The costs, whi...
What is Cost Unit | Measurements used as cost units What is Cost Unit? A cost unit refers to the unit of quantity of product, service or time (or combination of these) in relation to which costs may be...
Weaknesses of Traditional Cost Accounting System Weaknesses of Traditional Cost Accounting System Providing inaccurate costing information leads to taking of wrong decisions by the top management if...
Unit Costing | Meaning | Cost Accumulation | Ascertainment What is Unit costing? Unit costing is known as "output" or "single output" costing. Unit costing is followed by the concern, which produces a single ...
Types of tests commonly used by firms in selection of employees Types of Tests commonly used for recruitment in firms So far, a wide variety of tests have been devised by the industrial psychologists. But a detail...
Time Rate System of Wage Payment | Suitability | Merits | Demerits What Time Rate Wage System? Time Rate System is otherwise called as Time Work, Day Work, Day Wages and Day Rate. It is the oldest method of remunerat...

Leave a Reply