When business leaders don’t work, they do the next best thing—talk about the number of hours they work, or the number of hours others should be working.

And why not? Working hours are a barometer for productivity and growth. But how many hours make for “productive” hours, and how much over that is “counterproductive”, has been left in the hands of policymakers.

The new labour codes, announced last week, simplify India’s labyrinthine labour laws and break them up into four snackable codes around wages, social security, workplace conditions, and industrial relations.

And in the codes on workplace conditions, the labour gods imposed an eight-hour limit a day or a 48-hour limit a week. Even though this was the central government’s decision, it may not have been thrilled about it.

Its real feelings about working hours were on display in the 2024-25 Economic Survey, where it said working-hour restrictions hamper economic growth.

“There are instances where labour regulations designed to protect workers’ rights perhaps inadvertently hinder the growth of firms, especially small and medium enterprises, by restricting their ability to expand operations when needed compared to global peers. In doing so, it dampens employment generation as well,” the survey said.

But for now, it has decided to toe the line of having defined working hours. And if employees consent to working anything over those hours, companies have to pay an overtime premium of twice the wage.

When it comes to overtime hours, the new code leaves a tiny window open for companies.

In the older Factories Act, overtime was capped at 75 hours a quarter. But the new set of labour codes, codified back in 2020, removed uniform caps, leaving it to states to decide on them.

Since then, seven states—Maharashtra, Haryana, Himachal Pradesh, Odisha, Punjab, Karnataka, and Uttar Pradesh—have already increased the ceiling of overtime hours up to 144 hours in any quarter, potentially increasing earnings for employees in those states.

While the government has been liberal with overtime hours, what needed looking into was the overtime rates. Because the high rates may deter employers from asking employees to work overtime. This will eventually end up hitting those who want to work more to earn more.

India has one of the highest overtime wage premiums (see chart below).

Source: Economic Survey 2024-25

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As the Economic Survey pointed out: “Regulations also hurt workers by discouraging job creation, limiting wages, and encouraging informal employment. For example, Indian workers cannot formally work overtime because the law requires employers to pay at least twice the regular wage.