Overtime Allowance
Overtime Allowance was abolished from 1 July 2017 for most central staff, retained only for operational staff and statutory industrial employees at 1991 rates.
Overtime Allowance (OTA) is the allowance paid to a central government employee for authorised work beyond the normal office hours. Following the 7th Central Pay Commission, OTA was abolished with effect from 1 July 2017 for all categories of central government employees except operational staff and industrial employees governed by statutory provisions, and even for those retained categories the rates were not revised and remain frozen at the levels fixed in 1991. It is administered under the Department of Personnel and Training rules, by Office Memorandum No. A-27016/03/2017-Estt.(AL) dated 19 June 2018.
This article explains the allowance as it now stands: the long history of pay commissions recommending its abolition, the 7th Central Pay Commission decision and who was retained, the restrictive definition of operational staff and how each department builds its list, the freezing of the rates at the 1991 levels, the conditions of prior written authorisation and biometric attendance, the special rules for staff car drivers and field officials, the separate statutory overtime that industrial employees keep under the Factories Act, and the tax position.
OTA is the clearest example of an allowance the pay commissions decided the modern pay structure had outgrown. Once pay rose to the levels the 7th Central Pay Commission set, an hourly overtime rate frozen in 1991 made little sense for ordinary office work, and the government chose to discontinue it rather than revive it, keeping it only where a statute compels it or where round-the-clock operation genuinely requires it.
The long road to abolition
The recommendation to abolish OTA is not new. The Third, Fourth, Fifth and Sixth Central Pay Commissions each recommended that OTA be abolished except where it is a statutory requirement. Despite those repeated recommendations, OTA continued to be paid to various categories of staff, at rates that were already old, even where no statute required it. The 7th Central Pay Commission reviewed this history and reached the same conclusion as its predecessors, but this time the government acted on it.
The 7th Central Pay Commission recommended that OTA be abolished, except for operational staff and industrial employees who are governed by statutory provisions. It added a fallback: if the government nonetheless chose to continue OTA for categories where it was not a statutory requirement, the rates should be increased by 50% from the existing levels. The government did not take that path. It decided instead that, given the rise in pay over the years, OTA should be discontinued for all categories other than operational staff and statutory industrial employees, and it did not revise the rates for the retained categories.
The government decision and the governing order
The decision was given effect through the Department of Expenditure Resolution No. 11-1/2016-IC dated 6 July 2017 on the 7th Central Pay Commission recommendations on allowances, and the operating instructions were issued by the Department of Personnel and Training in Office Memorandum No. A-27016/03/2017-Estt.(AL) dated 19 June 2018. The instructions took effect from 1 July 2017.
The substance is in three parts: OTA is abolished for all categories except operational staff and industrial employees governed by statutory provisions; the rates are not revised and the 1991 rates continue; and the grant is tied to written authorisation and biometric attendance. The policy was reaffirmed in Parliament, where in June 2019 the government stated in the Rajya Sabha that overtime pay had been discontinued for all categories except operational staff and statutory industrial employees with effect from 1 July 2017, on the 7th Central Pay Commission recommendations.
For the great majority of central government employees, the ministerial and clerical staff of the central secretariat and the field offices, this means there is no OTA at all for staying late. Departments may instead grant compensatory leave for genuine extra work, under their own rules, but a cash overtime payment is no longer available to them.
Who counts as operational staff
The retained category is defined narrowly, so that the exception does not swallow the rule. The definition used is: all non-ministerial, non-gazetted central government servants directly involved in the smooth operation of the office, including those tasked with the operation of some electrical or mechanical equipment. Three limbs of that definition do the work:
- Non-ministerial. Clerical and secretariat staff, whose work is ministerial, are excluded. The category is aimed at those who run and maintain the office’s physical operation, not those who process its paper.
- Non-gazetted. Gazetted officers are outside it, consistent with the general rule that overtime is a benefit for the working-level staff, not for officers. The gazetted and non-gazetted distinction therefore governs eligibility here as elsewhere.
- Directly involved in smooth operation, including operating electrical or mechanical equipment. This brings in staff car drivers, electricians, lift operators, machine operators, caretakers and similar staff whose presence keeps the office running.
No list of eligible categories is laid down centrally. Instead, the Administration Wing of each ministry or department prepares its own list of the categories it treats as operational staff, with full justification against the parameters above, and the list is approved by the Joint Secretary (Administration) and the Financial Adviser of that ministry or department. So whether a particular category draws OTA depends on the departmental list, prepared and approved locally within the central definition.
The rates frozen at 1991 levels
The most consequential detail is that the rates were not revised. The government decided not to raise the OTA rates, so the rates prescribed in the Department of Personnel and Training Office Memorandum dated 19 March 1991, for office staff, staff car drivers and operative staff, continue to operate for the retained categories. The 7th Central Pay Commission’s own fallback suggestion of a 50% increase was not adopted.
The practical effect is that OTA is now a small payment. Pay has been revised by the 6th and 7th Central Pay Commissions since 1991, multiplying basic pay many times over, while the hourly overtime rate has stayed at its 1991 figure. An hour of authorised overtime therefore adds a modest sum, far below what an hour of the employee’s current pay would suggest. This mismatch is deliberate: freezing the rate rather than abolishing OTA outright for operational staff keeps the allowance alive where operations require it, without letting it grow into a large recurring cost.
The 1991 order also fixes how the overtime is measured, not only the rate. OTA is worked out on the extra time actually put in beyond the normal working hours, and the order requires a minimum period of extra duty on a given day before any overtime becomes admissible, so a few minutes past closing time earn nothing. The overtime is counted in completed units of time, the rate is applied to those units, and the total is paid monthly along with the pay. Because both the rate and the thresholds date from 1991, the whole calculation reflects the working pattern and the pay of that era rather than the present one, which is the source of the operational staff’s grievance discussed below.
The conditions: written authorisation and biometric attendance
Even for the retained categories, OTA is not automatic. Two conditions gate every payment:
- Prior written direction. OTA is paid only where a senior officer directs the employee in writing to stay back in office to attend to work of an urgent nature. Overtime worked on the employee’s own initiative, without a written direction, does not qualify.
- Biometric attendance. The OTA is calculated on the basis of biometric attendance where a biometric system, such as the Aadhaar-based system, is available. Where such a system is not available, the existing checks and balances continue. The effect is that the extra hours must be captured in the attendance record; hours not recorded are not paid.
These conditions were introduced to tighten a payment that had, in the past, been claimed loosely. Tying OTA to a written order and to biometric capture makes the claim verifiable and prevents routine or unauthorised overtime from being paid.
Staff car drivers and field officials
Two groups need special rules because their work takes them away from the office, where the biometric terminal sits.
For staff car drivers, the OTA is generally linked to the biometric system, because a designated parking is usually in the office building. But where the parking is far from the office, or an official exigency prevents the driver returning to the building, or the biometric system is not working, the calculation is done from the log book, duly verified by the officer concerned. A driver who drops an officer at a distant parking marks attendance while leaving the office, and a grace time of not more than two hours is allowed to cover the distance travelled after leaving, including dropping the officer and reaching the parking.
For field officials, the OTA is calculated on biometric attendance, since such officers usually have official transport for field work and are expected to report at the office before proceeding. Where an official goes to the field directly from home, they may be given official transport from home in place of transport allowance, and the OTA is worked out from the log book of that vehicle, verified by the senior officer.
The statutory overtime that industrial employees keep
The abolition did not touch the overtime of industrial employees governed by statutory provisions, and the distinction matters. A large number of government industrial and factory workers, in the ordnance factories, the railway workshops, the printing presses, the mints and similar establishments, are covered by the Factories Act, 1948, which confers a statutory right to overtime wages. Under that Act, a worker who works beyond the daily hours or the weekly hours it fixes is entitled to overtime at twice the ordinary rate of wages.
Because this overtime is a right conferred by statute, an executive order cannot take it away. So the industrial employees covered by the Factories Act and similar statutes continue to receive their statutory overtime at twice the ordinary rate, entirely unaffected by the abolition of the administrative OTA for other government staff. The 7th Central Pay Commission and the government were careful to preserve this, abolishing only the administrative OTA that rested on executive orders, not the statutory overtime that rests on law.
OTA within the wider allowance rationalisation
OTA sits among the allowances the 7th Central Pay Commission abolished or subsumed as part of its rationalisation of the allowance structure, discussed in the abolished allowances of the 7th CPC. It is distinct from the night duty allowance, which compensates work on a night shift rather than extra hours, and which was itself revised rather than abolished, and from compensatory leave, which some departments grant in place of cash overtime. It is also distinct from the pay-linked treatment of running staff, whose extra running time is dealt with through the running allowance rather than OTA. It is distinct again from an honorarium, which rewards work of a different character altogether under FR 46(b) and needs a sanction in each case, rather than paying for extra hours spent on the same duties.
Compensatory leave in place of overtime
The abolition of OTA for ordinary staff did not leave every extra hour uncompensated. Where a non-operational employee is genuinely required to work beyond office hours, or on a Sunday or a gazetted holiday, departments grant compensatory leave, often called a compensatory off, in place of cash. The employee who works on a holiday earns a day of leave to be availed later, rather than an overtime payment.
Compensatory leave is not the same thing as OTA and should not be confused with it. It is time, not money: it does not appear on the pay slip, it does not attract dearness allowance, and it is governed by the leave and attendance rules of the department rather than by the OTA order. It is the practical answer for the mass of ministerial and other staff who lost OTA in 2017, since it recognises the extra work without reviving a cash allowance the pay commissions had decided to end. The precise conditions, how much compensatory leave is earned, within what period it must be availed, and who may sanction it, are set by departmental instructions and vary between offices.
For operational staff who are eligible for OTA, the two are alternatives: the extra hours are met either by the frozen-rate OTA where the conditions are satisfied, or by compensatory leave, not by both for the same work.
The demand and the 8th CPC outlook
The freezing of the OTA rates at the 1991 levels is a standing grievance for the operational staff who still draw the allowance, because an hour of authorised overtime is paid at a rate fixed more than three decades ago while their pay has been revised repeatedly since. Staff associations have sought a revision of the OTA rates, and in the alternative the extension of a fairer compensatory mechanism, and have raised the matter for the 8th Central Pay Commission to consider.
Whether the 8th Central Pay Commission revises the OTA rates, restores the allowance for any wider category, or leaves the 2017 position intact is not known, and no revised rate or restored coverage can be stated as fact until that commission reports and its recommendations are accepted. Until then the position is the one set out above: OTA abolished for all but operational staff and statutory industrial employees, at unrevised 1991 rates, and compensatory leave for the rest.
The tax position
OTA is fully taxable. It is part of salary income in the year of receipt, no provision of the Income-tax Act exempts it, and it is taxed at the applicable slab rate with tax deducted at source, as the income tax for government employees article sets out. Because the retained OTA is small, its tax effect is correspondingly small, but it is not a tax-free allowance.
Frequently Asked Questions (FAQs)
Is Overtime Allowance still paid to central government employees?
Who counts as operational staff for OTA?
What are the rates of Overtime Allowance?
What conditions must be met before OTA is paid?
How is OTA handled for staff car drivers?
Do industrial and factory employees still get overtime pay?
Is Overtime Allowance taxable?
Related Articles
External references
References
- Department of Personnel and Training, Office Memorandum No. A-27016/03/2017-Estt.(AL) dated 19 June 2018, “Grant of Overtime Allowance (OTA) to Central Government employees, decision on the recommendations of the Seventh Central Pay Commission” (OTA abolished except for operational staff and statutory industrial employees with effect from 1 July 2017; definition of operational staff; rates not revised; biometric-attendance and written-authorisation conditions; rules for staff car drivers and field officials).
- Ministry of Finance, Department of Expenditure, Resolution No. 11-1/2016-IC dated 6 July 2017 on the recommendations of the Seventh Central Pay Commission on allowances (decision to discontinue OTA for categories other than operational staff and industrial employees governed by statutory provisions).
- Report of the Seventh Central Pay Commission, November 2015, chapter on allowances (recommendation to abolish OTA except for operational staff and statutory industrial employees, with a 50% increase in rates if continued for other categories).
- Department of Personnel and Training, Office Memorandum dated 19 March 1991 (rates of Overtime Allowance for office staff, staff car drivers and operative staff, which continue to apply to the retained categories).
- The Factories Act, 1948, Section 59 (overtime wages at twice the ordinary rate of wages for work beyond the prescribed daily and weekly hours, the statutory basis for overtime for covered industrial employees).