Overtime is the extra hours that employees work besides their regular working hours. According to the Labor Law Act of Bangladesh, the standard working period is 8 hours per day and 48 hours weekly. Any extension of this is translated as overtime, and a special overtime rate is calculated for those. Though this compensation can vary by industry, the rate is quite promising. Usually, the double hourly rate is allocated for the extra working hours.
The overtime calculation formula in Bangladesh is dividing the gross salary by the regular hours while multiplying by the hourly rate and overtime hours. It makes it somewhat complicated. Again, tracking all the employees’ working hours seamlessly is a challenge. But, this won’t be an issue if you use HR software. This system automatically syncs employee data, calculates accurately, and complies with Bangladeshi labor laws.
What Is Overtime in Bangladesh and Why Does It Matter?
As stated in section 108, Bangladesh Labor Act 2006, overtime is the hour an employee works in addition to his standard working hours. The labor law of Bangladesh mandates maximum working hours to be 8 hours daily (48 hours/week). Any extra hours worked besides these fall under overtime. As per overtime policy in Bangladesh, employees are entitled to twice the total salary rate for overtime hours.
As Bangladesh is developing economically in gradual steps, lots of sectors demand more working periods than usual time. Again, many employees also work overtime hours to earn an adequate amount at the end of the month.
What Is the Overtime Calculation Formula in Bangladesh?
The most common question is whether the overtime calculation is basic or gross. In Bangladesh, the overtime is calculated with respect to gross salary. Simply put, consider adding a basic salary with other extra allowances. It can be a house allowance, dearness, or medical allowance. All allowances, including basic salary, are summed to gross salary by which overtime is calculated.
Example 1 – Monthly Overtime Calculation in Bangladesh
According to the Global Employer Guide: Bangladesh, the general monthly overtime calculation formula in Bangladesh can be derived as –
Overtime pay = (gross salary / monthly working hours) * overtime rate * total overtime hours
Mr. Hasan works in an X company. His basic monthly salary is 25,000 BDT. The company also provides him with house rent of 12,000 BDT with 1000 BDT of medical allowance. He works a total of 12 hours overtime each month.
We will follow the above formula to understand how to calculate the overtime for monthly salary employee.
Here,
Gross salary = basic + house + medical
= 25000+12000+1000
= 38000 BDT
Monthly working hours = 8 hours per day * 26 days in a month
= 208 hours
Overtime rate = 2
Now, overtime pay = (gross salary / monthly working hours) * overtime rate * total overtime hours
= (38000 / 208) * 2 * 12
= 4380.6 BDT
Example 2 – Daily Overtime Calculation in Bangladesh
Mr. Korim works in an X company. His basic wage per day is 1200 BDT. His regular working time is 8 hours a day. He does overtime of 2 hours per day.
To calculate this, we can modify the previous formula to the daily overtime calculation formula.
Overtime pay daily = (gross wage / daily working hours) * overtime rate * total overtime hours
Here,
Gross wage = 1200
Daily working hours = 8
Overtime rate = 2
Daily overtime pay = (gross wage / daily working hours) * overtime rate * total overtime hours
= (1200 / 8) * 2 * 2
= 600 BDT
Example 3 – Hourly Overtime Calculation in Bangladesh
Mrs. Julie works in an X company. Her hourly wage is 150 BDT. She works 1 hour overtime per day.
For hourly overtime, we can use the below formula –
Overtime pay hourly = gross hourly wage * overtime rate * total overtime hours
Here,
Gross hourly wage = 150
Overtime rate = 2
Overtime hours = 1
Hourly overtime pay = gross hourly wage * overtime rate * total overtime hours
= 150 * 2 * 1
= 300 BDT
What Is the Formula for Calculating Overtime in Excel?
The overtime calculation formula in Excel is very simple and uses the basic formula. Below are the step-by-step instructions on calculating overtime hours using Excel, with an example.
- Set up the data table in Excel with employee information like monthly salary and total working hours.
- Breakdown the pay into hourly rates by using the division formula between monthly salary and required hours
- Use the multiplication formula with the hourly and overtime rates to get the overtime amount per hour.
- Then again, multiply this with the additional hours the employee has worked.
What Is the Overtime Policy in Bangladesh?
Overtime policy in Bangladesh can vary depending on the industries and working sectors. Typically, adult employees who work over 8 hours daily are eligible for overtime. Though there are exemptions in higher or decision-making positions, it is the general rule.
After completing 48 hours per week, additional hours are automatically subjected to overtime. However, section 102 limits overtime working hours to ensure proper work-life balance for the workers. It mandates that no worker shall work more than 60 hours per week, including overtime. That means no one can work more than 10 hours per day. There are exceptions in these laws for many sectors like RMG and manufacturing industries. If an employer does not give proper overtime pay, he must give the employee one day’s leave to avoid penalties.
What Is the Overtime Rate in Bangladesh?
The overtime rate is twice that of the regular hourly rate, as stated under Section 108 of the Bangladesh Labor Act. This overtime rate can be higher if the employee works on holidays or festivals.
The overtime rates can be different when the employee works on a piece-rate basis. As Article 108 (2) says, the employers shall consult with the workers to come up with an hourly wage. This does not need to be precise. An average hourly wage is enough to determine overtime pay. However, the labor law overtime calculations are subject to change in many industries.
Is Overtime Calculated on The Basic or Gross Salary?
In Bangladesh, the overtime is calculated with respect to gross salary. Consider combining a basic salary with additional allowances such as house, dearness, or medical allowances, all of which are summed to form the gross salary used for calculating overtime.
What Challenges Are Commonly Faced When Calculating Overtime in Bangladesh?
Though the overtime calculation formula looks pretty simple and easy, the practical scenario differs. Usually, different sectors like RMG, manufacturing groups, and healthcare companies face different challenges. Most of the time, the employees here need to work in irregular working periods. They often work fluctuating shifts and unexpected times exceeding legal working hours. Sometimes, even after working extra hours, they are not recorded properly. This happens due to the lack of standard record keeping system.
The calculations get even more complex as seasonal demands surge. All these along with the lack of knowledge and awareness of overtime ruling and labor laws often leads to unfair overtime payment.
How Can HR Software Simplify Overtime Calculations in Bangladesh?
All hassles of overtime calculation can be solved with the standard HR software system. HR software can simplify overtime calculations in Bangladesh. It addresses the specific challenges of the industries.
HR software has automated time-tracking tools for irregular hours and rotating shifts. Its standardized record-keeping system syncs employee data and automates overtime calculation. This system makes it easier to maintain records and calculate overtime hours and pay even with a large workforce. It never fails to comply with the changing labor laws and overtime policies.
Final Words
Overtime is the extra hours the employee works beyond their regular working hours. The Labor Law of Bangladesh fixed a payment rate of 200% of the regular hourly rate for overtime. Any eligible employee can work 12 hours max of overtime per week. The overtime calculation formula in Bangladesh is simple. But the process can be complex while dealing with a large workforce. Also, employers may encounter difficulties as different sectors might have different overtime policies. Using HR software is a great idea to remain compliant and for accurate overtime calculations.
