Should white-collared employees be paid overtime?

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Since the output of white-collared employees cannot be accurately measured, the solution lies in mutual respect and understanding between employers and employees.

It is 11 p.m. and Tarun is still in office preparing reports for the boardroom meeting to be held the next day. He was handed over mammoth work, which he is expected to deliver in just a day’s time.

This is not the first time he is sitting in office this late to complete work. His personal life is a mess and he is under stress. He believes his hard work should be rewarded and he should get paid for the overtime he has put in. He has decided to approach the Labour Court for the same.

Multiple labour laws for varied industrial sectors impose labour rights, including overtime limitations and payment:

Section 14 of the Minimum Wages Act, 1948 states that employees are paid their minimum wages for a fixed period, they are required to be paid extra as an overtime rate for any extra hours put in.

Section 51 of the Factories Act, 1948 states that employees are not supposed to work for more than 48 hours in a week, and under Section 59, for not more than nine hours a day. The time worked in excess of these 48 hours per week and nine hours per day will be counted as overtime under the Act, and will require the employer to pay workers twice the standard wage.

Partha Sinha

In the creative field, the act of creation is a completely individual pursuit. Be it writing dialogues or making music, the contract is to deliver something; it is not putting nine hours at work.

Labour laws segregate employees on the basis of industries they work in and the nature of their jobs. However, in HR terminology, the workforce is commonly divided into two categories—blue collared and white collared. Blue-collared employees are classified as workers who perform manual labour, while white-collared employees perform duties in office settings. Usually, overtime is paid to only blue-collared employees. White-collared employees are denied overtime pay but are offered fringe benefits, such as travel allowance, flexible working hours, and so on. This often leads to exploitation by employers causing work–life imbalance in the employees’ lives.

The nature of the work becomes the deciding factor to quantify the employees’ contribution towards the organisation. “In the creative field, the act of creation is a completely individual pursuit. Be it writing dialogues or making music, the contract is to deliver something; it is not putting nine hours at work,” says Partha Sinha, managing director, McCann Worldgroup. While some argue it is difficult to measure the output of white-collared employees, some believe calibrating white-collared employees’ output will only prove to be counter-productive.

“Blue collared employees usually perform jobs which are repetitive in nature and can be easily measured, for example, by number of pieces produced in certain number of hours worked. But for white collared employees, measuring output is challenging and can vary with quality of output depending largely on individual’s skills. It does not much matter how many hours they put in. What actually matters is what they deliver,” says Gajendra Chandel, chief human resources officer, Tata Motors Limited. 

Gajendra Chandel

Blue collared employees usually perform jobs which are repetitive in nature and can be easily measured, for example, by number of pieces produced in certain number of hours worked. But for white collared employees, measuring output is challenging and can vary with quality of output depending largely on individual’s skills. It does not much matter how many hours they put in. What actually matters is what they deliver

Peter Drucker, the father of modern management, believed, “If you can’t measure it, you can’t improve it.” The industry trends across the globe have a different story to tell. According to the US Labour Department data, more than 78 million Americans, that is, nearly 59 per cent of the workforce in the US is paid on an hourly basis. The key question is: Can productivity really not be measured or are we failing to measure it?

“The Shops and Establishment Act clearly defines the duration of the break to be given to employees. However it is not uncommon to experience far greater time derailed. Hence it is important to drive a stronger work ethic,” says Unmesh Pawar, Head – people, performance & culture, KPMG.

Unmesh Pawar

The Shops and Establishment Act clearly defines the duration of the break to be given to employees. However it is not uncommon to experience far greater time derailed. Hence it is important to drive a stronger work ethic.

Organisations also become victims to unnecessary overtime pay. Employees are often caught manipulating timesheets and taking home undeserving overtime pay. The brunt is borne by the companies who end up paying a lot more than required. Recently, Air India pilots came under the scanner, when they were found to have manoeuvred the flying hours for some easy money. As a result, the Airline’s losses are now running into crores of rupees.

With automation and digitalisation of industries, overtime is becoming a dated concept. Technology and machines have entered the workforce to help humans perform tasks in a faster, cheaper and more effective manner. Commonly referred to as the fourth industrial revolution, we are in the era of Industry 4.0—a name given to the current trend of automation and data exchange in manufacturing technologies. “We have greater things to be worried about with the technological shifts that are impacting the industry in general. Labour laws need to be relooked at in the light of these tectonic shifts. Just protectionism will render the workforce to slowly become redundant,” says Pawar.

Organisations understand and appreciate the efforts of employees who put in extra hours and hard work to achieve the company’s goals. Policies and benefits are designed keeping in mind the welfare of the employees. However, considering the fact that all jobs are not the same, and the expectation of every job role is different, overtime as remuneration is not justified, nor is it always the solution to additional working hours. The utopian dream can be achieved only by mutual understanding and respect between employees and their organisations.

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