How to Calculate Overtime for Garment Workers in Bangladesh (With Examples)
The legal formula for garment overtime in Bangladesh, which wage components count, worked examples at the current minimum wage, and the payroll mistakes auditors find most often.
Overtime is one of the biggest line items in a garment factory's payroll, and one of the first things buyers' auditors check. Get the formula wrong, and you either overpay every month or underpay workers and fail a compliance audit. This guide explains how overtime is calculated under Bangladeshi law, with worked examples.
The legal rule
Under Section 108 of the Bangladesh Labour Act, 2006, a worker who works beyond the legal working hours is entitled to overtime at twice the ordinary rate of basic wage, plus dearness allowance and any ad hoc or interim wage.
The key point is that overtime is calculated on the basic wage, not the gross salary. House rent, medical, transport and food allowances are not part of the overtime base.
The formula
For monthly-paid workers, the Labour Rules convert the monthly wage into an hourly rate using a divisor of 208 hours (48 hours a week averaged across a month):
Overtime pay = (Basic wage + dearness allowance + ad hoc/interim wage) ÷ 208 × 2 × overtime hours
In most garment factories, there is no dearness or ad hoc component, so in practice:
Overtime rate per hour = Basic ÷ 208 × 2
Worked example at the entry-level grade
Under the RMG minimum wage structure effective December 2023, the entry grade (Grade 7) has a gross wage of Tk 12,500 with a basic of Tk 6,700.
Step | Calculation | Result |
|---|---|---|
Hourly basic | 6,700 ÷ 208 | Tk 32.21 |
Overtime rate | 32.21 × 2 | Tk 64.42 per hour |
40 OT hours in a month | 64.42 × 40 | Tk 2,577 |
Remember that basic wages rise with annual increments, so use each worker's current basic from the wage register, not the original grade figure.
The most common mistake: using gross salary
Some factories divide the full gross salary by 208. At Tk 12,500 gross, that gives Tk 120.19 per overtime hour, almost double the legal rate. Across 2,000 workers doing 40 hours of overtime each month, that error costs millions of taka a year.
The opposite mistake is worse: leaving out a component that should be included (such as a dearness or interim allowance, where one exists). That underpays workers and is a legal violation.
Working hour limits
Overtime pay is only part of compliance. The law also limits how much overtime can be worked:
Normal hours are 8 per day and 48 per week.
With overtime, a worker may work up to 10 hours a day and 60 hours a week, with the average not exceeding 56 hours a week over the year.
Overtime must be recorded in the overtime register and paid with the regular wages.
Buyers' codes of conduct and audit programs often apply the 60-hour weekly cap strictly, so plan production schedules with it in mind.
Other mistakes auditors find
Rounding minutes inconsistently. Decide on a written rounding policy (for example, overtime counted in completed 30-minute blocks) and apply it the same way for everyone.
Weekly holiday work. Work on the weekly holiday needs to be compensated according to the law, either with a substitute holiday or overtime treatment. Don't silently treat it as a normal day.
Attendance and payroll not matching. If the overtime hours on the payslip don't match the punch records from the attendance machine, auditors will flag it, even when the pay itself is correct.
Manual spreadsheets. Copy-paste errors in Excel salary sheets are the most common source of overtime disputes.
A note on the 2025 labour law amendment
The Bangladesh Labour (Amendment) Ordinance, 2025 changed many sections of the Labour Act, including leave and festival holidays, and the Labour Rules are being revised to match. The overtime principle described here (twice the basic-based rate) is the established rule, but check the latest rules and gazette notifications, or consult your legal adviser, before changing your payroll policy.
How software removes the guesswork
The safest approach is to calculate overtime directly from attendance data, with no manual step in between. Octa Punch pulls punch records from biometric devices, applies your shift rules and overtime policy, and produces salary sheets and bilingual payslips where every overtime hour can be traced back to a punch. Book a free demo to see it with your own factory's data.