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Define comp off and overtime policy

Updated in November- 2023 | Subscribe to watch greytHR how-to video

Defining a comp off and overtime policy involves establishing clear guidelines and rules within an organization regarding compensatory time off (comp off) and overtime work. These policies outline how employees will be compensated for working additional hours beyond their regular work schedule or for working during designated periods, such as holidays or weekends.

The Overtime Policy page in the greytHR Admin portal helps you to define an overtime policy's various attributes, such as name, block time, break hours, and view the summary of the policy. You can view the following settings after you create your first overtime policy:

  1. General Settings

  2. Eligibility Settings

  3. Payout Settings

  4. Overtime Summary

You can also define the comp-off eligibility hours from the Overtime Policy page. To define the comp-off eligibility hours, you must configure the comp-off settings on the Leave Rules page.

To view the Overtime Policy page, click the Settings icon > System Settings > Attendance > Overtime Policy.

⚠️ We recommend you to contact the greytHR support team before making any changes in settings.

General settings

After creating your first policy, you can view all the settings on the Overtime (OT) page. The General Settings include the following sections:

  1. Category Selection

  2. Policy Name 

  3. Policy Description

  4. Category values

Category selection

The Category Selection option is available only for the first time. We recommend you to use Category Selection only when a single category is available for the entire company. The category set by you applies to all overtime policies in the future. To set up a category, perform the following actions:

  1.  Enable Category Selection.

  2.  Click Setup Now. The Category Setup pop-up window appears.

  3.  Select a category from the Select Category dropdown list.

  4. Click Confirm to select the category.

Policy name

  • In the Policy Name text box, enter the name of the policy. 

Note: The policy name must not exceed 60 characters.

Policy description

  • In the Policy Description text box, enter a short policy description. You can include the policy's purpose or define the group of employees who will be included in the policy.

Category values

The Category Values dropdown list includes all the components of the category you have selected in the Category Selected setting of the OT policy. When an employee is added to the application with the same category value as the OT policy, the employee is automatically assigned to the OT policy. An employee is assigned to the policy from the date when a category is added to the policy. You can select multiple values at a time.

Let us understand the Category values with the help of the following examples:

Example 1: 

Let's assume you have created a category called Overtime. In the Overtime category, you have added category values like Paintshop, Welding, and Molding. Now, consider that you are adding an employee to the application. In the Add Employee settings, as soon as you select a category value as Paintshop under the Overtime category, this employee is automatically assigned to the respective overtime policy.

Example 2:

Consider that you have created a policy as a Nightshift policy. In this policy, assume category selection is Location. Based on the location, there are Category values such as Delhi, Bangalore, Chennai, etc. You have selected Bangalore. When an employee in Bangalore is added to the application, the Nightshift policy is auto-assigned to the employee. 

Click Save to save the policy settings that you have configured. If you want to review the settings, click Review and Submit. You are redirected to the Summary settings.

Eligibility settings

The Eligibility settings help you to define the eligibility of overtime and comp off hours for an employee. This criterion is based on many factors, such as the rest time provided to the employees after shift and the maximum number of hours for which an employee can apply overtime.
The Eligibility settings page includes the following sections:

  1. Break Hours

  2. Maximum Overtime

  3. Eligibility Calculation

    1. Minimum hours for half-day Comp Off eligibility 

    2. Minimum hours for full-day Comp Off/ Overtime eligibility

    3. Block time for overtime calculation

    4. Overtime round off to block time

Break Hours

Break hours is the rest time allowed to all the employees after the end of their shift and the beginning of overtime hours. You can configure the rest time as per your company policy in the Break Hours settings. This rest time is then deducted from the employee’s overtime hours for the purpose of calculating overtime pay. The Break Hours 00:00 displays in the hh:mm format. 

For example, an employee works for three hours as overtime on a Half Day, and you have defined 30 minutes as Break Hours. Our application deducts 30 minutes from a total of three hours of overtime. The employee is paid overtime for two hours and thirty minutes.

You can configure Break hours for the following day types:

  • All: Adding break hours in the All textbox applies the break hours to all the day types. 

  • Rest Day: Adding break hours in the Rest Day textbox applies the break hours to employees who work on a rest day.

  • Off Day: Adding break hours in the Off Day textbox applies the break hours to employees who work on an off day.

  • Holiday: Adding break hours in the Holiday textbox applies the break hours to employees who work on a holiday.

  • Regular Day: Adding break hours in the Regular Day textbox applies the break hours to employees who work overtime on a regular day.

  • Half Day: Adding break hours in the Half Day textbox applies the break hours to employees who work overtime on a half day.

Note: As you enter a value in All day type, all the day types will have the same value as entered in the All text box. If a value entered in any other day type is different from the other day types, then the value entered in the All text box will become 00:00. You can customize different timings for different day types.

Consider a situation where you have allotted 15 minutes as the Break Hour for day type Rest Day.

Example 1: An employee has worked for 3 hours as overtime on a rest day. Our application will deduct 15 minutes from a total of 3 hours of overtime. The gross OT will become 2:45 minutes.

Example 2: An employee has worked for 15 minutes as overtime on a rest day. Then the gross OT will become 0 minutes.

Maximum Overtime 

As per the statutory requirement, every company must ensure the number of overtime hours an employee works are within the statutory limit. Therefore, companies prefer to set a maximum limit for overtime hours. greytHR provides you with an option to set this maximum limit. The maximum limit can be set for the following periods: Daily, Weekly, Monthly, and Quarterly.

Note: The information gets validated on the Apply Overtime page only when an OT admin applies for overtime. The order of validation is Quarterly, Monthly, Weekly, and Daily.

Eligibility Calculation

  1. Minimum hours for half-day Comp Off eligibility:
    In this setting, you can specify the minimum time an employee must serve to qualify for half-day comp off. An employee cannot claim for comp off unless the configured work hours are fulfilled.  

  2. Minimum hours for full-day Comp Off/ Overtime eligibility:
    In this setting, you can specify the minimum time an employee must serve to qualify for full-day comp off/overtime. This time is calculated after the break hours are deducted from the total number of extra hours worked by the employee or when an employee works on the leave day.

    1. Calculate the minimum hours for full-day comp off/ overtime eligibility or half-day comp off in the following ways:

      1. Define eligibility hours as per day type. To define the eligibility hours as per day type, perform the following actions:

      2. On the Overtime policy page, under the Eligibility Calculation section, select Calculation Type as Day Type.

      3. Under the Minimum hours for half-day Comp Off eligibility/Minimum hours for full-day Comp Off/ Overtime eligibility section, define the hours in Rest Day, Off Day, Holiday, Regular Day, PlantShutDown, and Half Day text box as per your requirements.

      4. Click Save to update the changes.

    2. Define eligibility hours as per shift. To define eligibility hours as per shift, perform the following actions:

      1. On the Overtime policy page, under the Eligibility Calculation section, select Calculation Type as Shift. The table appears.

      2. Under the Minimum hours for half-day Comp Off eligibility/Minimum hours for full-day Comp Off/ Overtime eligibility section, In the shift table, define the hours in Rest Day, Off Day, Holiday, Regular Day, PlantShutDown, and Half Day text box as per your requirements.

      3. Click Save to update the changes.

  3. Block time for overtime calculation:
    Usually, employees don’t work for exactly 3 hours or 4 hours. They might finish the work in 3 hours and 10 minutes or 3 hours and 59 minutes. In such cases, the application must round off the overtime hours. Block time for overtime calculation and Overtime to round-off to block time settings help you in rounding off overtime hours with great ease.
    The application calculates overtime hours by the amount of time specified in the Block time. The minimum time is one minute. In such a case, the application will round off overtime to the closest whole minute. For example, you have assigned blocks of 15 minutes. The application will pay overtime in blocks of 15 minutes each and round off each block as per the round-off settings. 

  4. Overtime round-off to block time:
    There are four types of round-off in the Overtime to round-off to block time dropdown list. You can choose the round-off calculation in the application by selecting an option from the dropdown list. Let's understand these round-off definitions by assuming Block time as 15 minutes:

  5. Round up:  Any overtime between 0 to Block time (15 min) will be rounded up. For example, 2 hours and 20 minutes become 2 hours and 30 minutes.

  6. Round down: Any overtime between 0 to Block time (15 min) will be rounded down. For example, 2:20 minutes becomes 2:15 minutes.

  7. Normal round: In the Normal round-off, Block time (15 min) is divided into half. Any overtime between 0 to half-block time (7 min 30 sec) is rounded down. Any overtime from half block (7 min 30 sec) time to full block time (15 min) is rounded up. For example, 15 minutes Block time is divided by 2 (7 min 30 sec). The calculation for 2:18 minutes becomes 2:15 minutes, and 2:23 min becomes 2:30, respectively.

  8. No roundoff: No Block time will be considered. For example, if overtime is 23 minutes and 15 seconds, payment will be made precisely for the overtime done.
    Click Save to save the policy settings that you have configured. If you want to review the settings, click Review and Submit. You are redirected to the Summary settings.

Payout settings

The Payout settings allow you to calculate payments for overtime done by employees. The payout is calculated based on either a flat structure or a pre-calculated component added to the salary. Few companies pay based on the day type, and some pay based on the shifts.
The Payout Settings include the following sections:  

  • Calculation Type

  • Overtime Calculation Method

  • Overtime Pay-Rate Calculator

Calculation Type:

For calculating overtime payout, select Day Type or Shift option. In greytHR, Day Type is the default Calculation Type

Overtime Calculation Method:

For overtime payout calculation, you must choose a calculation method along with the Calculation Type. There are two ways in which you can calculate overtime payout.

  1. Flat: This option allows you to specify a fixed amount for each overtime hour. A flat rate is a numeric value denoted in rupees.

  2. Component: This option allows you to specify a component from the payroll, such as basic and gross. You can then select the component as a multiplying factor for the payout.

Overtime Pay-Rate Calculator:

The calculation is done on the fixed rate you specify or based on the payroll component you select. This payroll component is indicated as x for calculation purposes.

Let us consider the following scenarios to understand the pay-rate calculations better:

Calculation of Overtime Pay-Rate based on Flat method

Use case 1: 

Calculation Type: Day Type and Overtime Calculation Method: Flat

You can define a flat rate in the table in the following ways:

  • From the dropdown list available in each text box, you can select Configure as Rates/Configure as Comp-Off as per your requirements.

    • If you select Configure as Comp-Off option, all the day types text boxes will contain comp-off.

    • If you select Configure as Rates option, enter the amount in the All text box. In such a case, the amount you entered is applicable for all the day types. You can also enter separate amounts for all the different day types. Here, the All textbox will remain blank.

Note: If a flat amount is entered for the All textbox, then all the day types across the row will have the same values as entered in the All textbox. You can still change the individual entries for all day types. In this case, the All textbox becomes blank.

Use case 2: 

Calculation Type: Shift and Overtime Calculation Method: Flat

Under the Overtime Pay-Rate Calculator section, a table appears. From the table, in the Shift Type column, you can view all the shifts created in the Attendance module automatically. You can define a flat rate in the table in the following two ways:

  • From the dropdown list available in each text box, you can select Configure as Rates/Configure as Comp-Off as per your requirements.

    • If you select Configure as Comp-Off option, all the day types text boxes will contain comp-off.

    • If you select Configure as Rates option, enter the amount in the All column against all the Shift Type. In such a case, the amount you entered is applicable for all the day types. You can also enter the amount in each day type separately against the required shifts.

Note:

  • When a flat amount is entered for the All column, all the day types across the row will have the same values as those entered in the All column. You can still change the individual entries for all day types. In this case, the All column becomes blank.

  • It is mandatory to enter a flat rate for all shifts.

Calculation of Overtime Pay-Rate based on the Component method

You must select an OT payroll component (x) for calculating the pay rate from the Select Payroll Component dropdown list. These components can either be any existing payroll component such as Basic, Gross, and Dearness Allowance (DA), or a component you have configured. You can configure the component by creating a formula such as Basic + DA for the component from the Payroll Repository page. After you create the formula on the Payroll Repository page, it can be added to the Select Payroll Component dropdown list.

The OT payroll component (x) is multiplied by the values available in the table under each day type drop-down list. By default, greytHR offers 0x, 1x, 2x, 3x, and 4x as the list of values. Few users want to configure the list of values such as 1.25x or 2x.

To configure the list of values, navigate to System Settings > General > List of Values. Add the values under Overtime Payroll Multiplier.

Use case 3: 

Calculation Type: Day Type and Overtime Calculation Method: Component

Under the Overtime Pay-Rate Calculator, from the Select Payroll Component dropdown list select the required component.
You can enter the list of values in the table in the following two ways:

  • From the dropdown list available in each text box available in the table, you can select Configure as Rates/Configure as Comp-Off as per your requirements.

    • If you select Configure as Comp-Off option, all the day types text boxes will contain comp-off.

    • If you select Configure as Rates, enter the value in the All textbox. In such a case, the value you entered is applicable for all the day types. You can also enter separate values for all the different day types. Here, the All textbox will remain blank.

Note: When a flat amount is entered for the All textbox, all the day types across the row will have the same values as those entered in the All textbox. You can still change the individual entries for all day types. In this case, the All textbox becomes blank.

Use case 4: 

Calculation Type: Shift and Overtime Calculation Method: Component

Select an OT payroll component from the dropdown list. In the table, the Shift Type column displays all the shifts created in the Attendance module automatically. You can enter the list of values in the table in the following two ways:

  • From the dropdown list available in each text box, you can select Configure as Rates/Configure as Comp-Off as per your requirements.

    • If you select Configure as Comp-Off option, all the day types text boxes will contain comp-off.

    • If you select Configure as Rates, enter the amount in the All column against all the Shift Type. In such a case, the amount you entered is applicable for all the day types. You can also enter the amount in each day type separately for all the shifts.

Note:

  • When a flat amount is entered for the All column, all the day types across the row will have the same values as those entered in the All column. You can still change the individual entries for all day types. In this case, the All column becomes blank.

  • It is mandatory to enter a flat rate for all shifts.

Click Save to save the policy settings you have configured. If you want to review the settings you have configured and then submit the policy, click Review and Submit. You are redirected to the Summary settings.

Overtime Summary

The Overtime Summary settings display an overview of all the settings you have configured in General, Eligibility, and Payout settings. You can view Important Details of a policy, such as the date on which the policy was created and modified, how many employees have been assigned to the policy, and the details of the policy. You can also activate a policy in the Summary settings. 

The Summary Settings include the following sections:

  1. Include Unselected Rules

  2. Important Details

  3. Overview of General, Eligibility, and Payout settings

Include Unselected Rules:

This option is not selected by default. This means that, in summary, you will only see the settings which you have configured up till now. Click the Include Unselected Rules option to view all the settings. Even the settings which you have not configured will also be visible. You can configure or edit any setting by clicking the arrow at any time. 

Important Details:

Important Details include the following details: 

  1. Effective From: This indicates the date from which the policy is active or scheduled to be active. When the policy is in DRAFT state, - appears.

  2. Assigned Employees: This indicates the number of employees assigned to the policy. When there are no employees assigned, 0 appears.

  3. Last Modified Date: This indicates the latest date on which the policy was saved. When there is no modification date, - appears.

  4. Last Modified By: This indicates the name of the employee along with the employee Id. When no one has modified the policy, - appears.

  5. Details: For more details about the policy, such as Created By and Created Date, you can click info. Important Details pop-up appears.

Activating the Policy

You can create and activate a policy at any time or schedule the activation of the policy at a later date. Saving a policy in settings will not activate the policy by default. Perform the following actions to activate a policy:

  1. Navigate to policy SUMMARY settings.

  2. Click Activate. Activate Policy pop-up appears.

  3. Select the policy activation date from the Effective From dropdown calendar.

  4. Enter remarks in the Remarks textbox.

  5. Click Activate. A success appears. 

Note: Once a policy is activated (Active state), you cannot change any settings in the policy. You can only view the policy in read-only mode. 

You can configure the Overtime Workflow Levels settings from the Workflow Levels page. On the Workflow Levels page, you can decide the number of reviewers required for processing an application. You can also customize the action items all the reviewers can take on an application.

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