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Overtime Compensation
WORKPLACE CODE PROVISION: "In addition to their compensation for regular hours of work, employees will be compensated for overtime hours at such premium rate as is legally required in the country of manufacture or, in those countries where such laws will not exist, at a rate at least equal to their regular hourly compensation rate."
Click here to access FLA Benchmarks for this provision.
FLA Year Two IEM Findings - Overtime Compensations
* Please note that these findings represent the 1,595 incidences of separate noncompliance issues as found in 105 of the 110 factories subjected to IEMs in Year Two.
Click here for more about the way this data was collected.
Overtime Compensation (5 percent of total reported noncompliance) is related to the FLA Code provisions Wages and Benefits and Hours of Work, which together comprised 30 percent of noncompliance findings in Year Two. Most noncompliance with this Code provision related to wage payments that were below legal requirements for overtime hours worked. Click here to access a breakdown of Year Two reported noncompliance issues tallied according to the Wages and Benefits benchmarks.
In various instances, inadequate compensation of overtime hours resulted in workers not being paid 150 percent, 200 percent, or 300 percent of minimum wages for overtime work, as is required by local law in different countries. In other cases, workers worked during one half of their lunch hour and were not compensated accordingly. Interviews demonstrated that workers faced unpleasant consequences for refusing to work overtime, and that overtime was the rule, rather than the exception for many workers.
In 20 percent of the cases, overtime compensation noncompliance was due to management's failure to provide complete records of overtime work. Monitors also observed that some supervisors were keeping separate books to record the overtime worked by the workers, and did not want to disclose those records to monitors.
Some FLA monitors and brands have observed a general distrust for company compliance staff among factory management in various countries, which has stood in the way of transparent reporting of hours, wages, and overtime compensation. With ongoing dialogue, however, some brands have reported cases of management becoming more transparent in providing access to records relating to working hours, compensation, and back wages. In cases where overtime was not being paid, some companies have found that efforts to help management develop realistic production schedules or to improve productivity have alleviated overtime, and provided the cash to pay overtime when necessary. There have also been reports of factories providing services that workers request in addition to paying overtime premiums required by law. For example, a footwear factory in Indonesia, in addition to paying overtime, provided transportation for 3 shifts so that workers would not have to walk home after night shifts. In several other factories, workers working overtime were provided breaks, snacks, or meals.
Please click here to visit the tracking charts to review how various companies have worked to remediate these and other issues.
Link to:
| Wages and Benefits Benchmarks |
Number of Noncompliance Issues |
Percent of Total |
| Minimum Wage |
19 |
8% |
| Training Wage |
2 |
1% |
| Wage Benefits Awareness |
31 |
12% |
| Wage and Benefits Posting |
9 |
4% |
| Wage and Benefits Information Access |
10 |
4% |
| Voluntary Use of Benefits |
1 |
0% |
| Deduction for Services |
2 |
1% |
| Payroll Reporting |
6 |
2% |
| Pay statement |
14 |
6% |
| Time-recording system |
27 |
11% |
| Record Maintenance |
15 |
6% |
| Legal benefits |
37 |
15% |
| Payment of wages |
4 |
2% |
| Payment of Legal Benefits |
7 |
3% |
| Timely Payment of Benefits |
5 |
2% |
| Illegal Holding of Funds |
2 |
1% |
| Legal Compliance for holiday/leave |
9 |
4% |
| Accurate recording of wage compensation |
9 |
4% |
| Timely Payment |
4 |
2% |
| Minimum wage/ Quotas |
2 |
1% |
| Minimum wage/ Incentives |
1 |
0% |
| False Payroll Records |
11 |
4% |
| Record Maintenance |
13 |
5% |
| Accurate benefit compensation |
7 |
3% |
| Wages and Benefits Other |
5 |
2% |
| Total |
252 |
100% |
| Overtime Benchmarks |
Number of Noncompliance Issues |
Percent of Total |
| OT Breaks |
3 |
4% |
| Accurate recording of OT hours worked |
16 |
20% |
| OT Compensation |
33 |
42% |
| OT Compensation Awareness |
11 |
14% |
| OT Compensation for Piece |
5 |
6% |
| Voluntary OT |
8 |
10% |
| OT Other |
3 |
4% |
| Total |
79 |
100% |
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