Overtime is an essential part of factory operations in India — especially in industries with:

✅ 3-shift operations
✅ Seasonal demand peaks
✅ Urgent production deadlines
✅ High-volume manufacturing units

But managing overtime manually leads to:

❌ Errors in overtime pay calculation
❌ Payroll disputes
❌ Compliance risks → Factories Act, 1948
❌ Audit challenges

In this blog, we’ll show you how Indian factories can automate overtime tracking using PagarAi’s Shift Attendance & Payroll Software → saving HR time, reducing risk & improving employee trust.

Overtime Compliance → Why It Matters

Legal requirements:

• As per Factories Act, 1948 → employees working beyond 9 hours/day or 48 hours/week must be paid double the ordinary rate of wages.
  
• Proper Shift & Attendance records must be maintained → presented during audits.
  
• PF/ESI/TDS applicability extends to overtime earnings → must be calculated correctly.
  

Non-compliance can lead to:

✅ Penalties → ₹10,000 per instance or more
✅ Interest charges on underpaid wages
✅ Employee dissatisfaction & attrition
✅ Legal risks → non-compliance with labor laws

Challenges with Manual Overtime Tracking

Most Indian factories using manual or outdated attendance systems face:

• Inaccurate overtime tracking → HR relies on supervisor reports
  
• No centralized visibility across multiple shifts & departments
  
• Difficulty reconciling overtime with Shift Attendance → Payroll
  
• Errors in calculating correct overtime pay → leads to disputes
  
• Missing or incomplete records → audit risk
  

👉 The result → inefficient payroll processes → compliance penalties → employee trust issues.

Why Automation is the Answer

Automating overtime tracking ensures:

✅ Accurate, verified overtime → based on real attendance
✅ Transparent calculation → visible to HR & employees
✅ Direct integration with payroll → no manual reconciliation
✅ Compliance with Factories Act & labor laws → audit ready
✅ Improved trust & satisfaction → employees see accurate pay for extra work

How PagarAi Automates Overtime Tracking

1️⃣ AI Face Recognition + Shift Attendance

• Attendance marked per shift → verified by AI Face Recognition
  
• Shift start/end times tracked → overtime hours auto-detected
  

2️⃣ Dynamic Overtime Calculation

• Factory defines overtime rules in PagarAi → as per Factories Act
  
• PagarAi calculates:
  
  • Overtime hours per day
    
  • Overtime hours per week
    
  • Overtime pay → at double wages
    
• Auto-adjusted for:
  
  • Shift pattern changes
    
  • Holiday working
    
  • Split shifts
    

3️⃣ Integrated with Payroll & Compliance Engine

• Overtime pay flows automatically into Payroll → no manual entry
  
• PF/ESI/TDS calculations include overtime earnings → full compliance
  
• Audit reports generated → ready for inspection
  

4️⃣ Real-time Overtime Visibility

• HR & Factory Managers can view real-time overtime dashboards:
  
  • Total overtime by department
    
  • Employee-wise overtime tracking
    
  • Exception reports → flag excess overtime or non-compliance risks
    

5️⃣ Employee Transparency

• Employees can view overtime records in Self-Service Portal → builds trust → reduces payroll queries.
  

Real-World Example: Factory Success with PagarAi

Case Example:
A 400-employee automotive parts factory in Tamil Nadu automated overtime tracking with PagarAi.

Before PagarAi:

• Manual overtime tracking → Excel sheets from supervisors
  
• 20+ payroll errors per cycle → employee disputes
  
• Compliance risk → incomplete overtime registers
  
• Payroll processing delayed by 4+ days
  

After PagarAi:
✅ 100% automated overtime calculation → linked to Shift Attendance
✅ Overtime errors reduced by 95%
✅ Payroll cycle completed 2 days faster
✅ 100% compliance maintained → passed labor audit
✅ Employee satisfaction improved → transparent payslips showing correct overtime

Conclusion: Smarter Overtime Tracking for Indian Factories

In today’s competitive manufacturing environment, automating overtime tracking is no longer optional — it is essential for:

✅ Payroll accuracy
✅ Labor law compliance
✅ Audit readiness
✅ Employee trust & retention
✅ Operational efficiency

PagarAi’s Shift Attendance & Payroll Software enables Indian factories to:

✅ Track overtime accurately → per shift, per employee
✅ Automate overtime pay calculation
✅ Ensure full compliance with Factories Act
✅ Improve payroll accuracy & HR productivity
✅ Build trust through transparent pay practices

👉 Ready to automate overtime tracking for your factory?
Explore PagarAi’s Shift Management, Attendance System and Compliance Engine — request a free demo today.