Decoding the term

‘Compensatory off’, is a self-explanatory term. When an individual works overtime at an institution that constitutes work time exceeding the normal number of working hours per day, he/she is offered with compensatory offs in order to compensate for overtimes and overexertion on behalf of the employee. Also termed as the ‘compensatory leave’, the compensation for overtime is provided either in terms of monthly leaves or as monthly payments, as agreed upon by the employer as well as the employee.


Basically compensatory off leaves are provided in order to reward the employee for the extra effort that he/she puts in, for the development of the organization. This is a means of taking care of the employee on behalf of the organization so that the employees, in-turn takes equal care of the organization by maximizing his/her efforts and garnering huge profit margins.



It is a common fact that individuals refuse to put their 100% effort into anything unless and until there is equal involvement of appreciation and rewards in the same. Compensatory offs can be considered a method to lure the employees into giving their best in return for appreciation as well as compensation.


Before the establishment of compensation in the form of offs or payments, there were a variety of grievances that plagued the employees in general. They were:


  • Overexploitation

Employees were overexploited by forcing them to work for long and untimely working hours that stretched long into the nights.


  • Meager Salary

While an employee was forced to do overtime, he/she was only paid with the amount that others in their league were being paid. No specific distinction was given in order to appreciate the extra effort on behalf of the employee


  • Health issues

Long working hours that stretched into the nights took a toll on the health’s of the employees and the meagre salaries provided to them were not sufficient to take care of their health-related monetary needs


All the aforementioned grievances started leading to impacts like loss of interest, anger issues, and general disagreement among employees at their workplace. Insufficient interest led to situations where employees out rightly refused to put any extra effort and this led to degradation of the organisation. It also led to mass protests and strikes by the employees of different organisations in order to avail their hard-earned right.


Finally, after much negotiation and discussion, it was agreed to provide the employees with extra cash or extra leaves to compensate for their extra effort for the development of the organisation.


The Laws of Fair Work-ship – FLSA

The Fair Labor Standards Act or FLSA was first established in the year 1938 to create the principles of minimum wage, justifiable work-hours and shifts, and appropriate over-time payment a fundamental to go by for all the workers. Prohibition of the practice of hiring minors as employees, in view with the oppression subjected over child labour, has been among the primary goals of the FLSA. The FLSA has been constantly updated in order to accommodate furthermore, the variety of employees and their respective requirements from the companies or supervising bodies.

Ever since its creation in the 1930’s, there have been multiple amendments in the Act. Some of the prominent ones are the Fair Labor Standards Amendment of 1949, Equal Pay Act demanding no sex-based discrimination in payment of employees issued in 1963, 1967 amendment removing the low-bracket wages of employees over an age or the Age Discrimination in Employment Act, the Migrant and Seasonal Agricultural Worker Protection Act of 1983, 1996 Small Business Job Protection Act that protect the normal wage of an employee, irrespective of the tipping practiced, among many others.

The entrance into the 21st century saw major reforms in the FLSA, starting with the rule change in 2004, that entailed the reclassification of low-level supervisors as ‘executives’ and the redefinition of ‘exempt employees ’. There were amendments in 2007 and 2010 to include fair minimum wages and provide patient protection and affordable care, respectively, further strengthening the rights of various level workers and employees. The 2016 change of rule expanded the inclusion of millions of employees, so-far, by announcing new thresholds for eligibility. The FLSA, since its inception has been the ultimate care-taker of employee rights and protection.


Terms of granting off

To avoid the misuse of compensatory offs, every organisation has a customised set of rules and regulations for the same depending on the needs and requirements of the organisation as well as the employees. Here are a general set of rules and policies for granting compensatory offs-


  • Compensatory offs are accrued to both FLSA exempt as well as non-exempt employees of the organisation
  • In the US, compensatory time off must be utilised by the employee by the end of the 26th pay period and after the pay period during which the overtime is done.
  • Some organisations also offer payment in case of unused compensatory offs
  • Generally, every hour of overtime grants an hour of compensatory leave respectively.


Compensatory Offs – The Roles and their Responsibilities

  • Employee or applicant – The employee is entitled to the compensatory-off,  corresponding attendance  or extra working day allowance based on days the employee works per week. Certain companies have the policy of working 6 days a week. In such cases, the employee is not granted with the provision of an off on account of compensation for working hours.                                                                                     In some companies, the 6-days working pattern is kept on rotation for their employees. Under this arrangement, the employee must work into extra hours or 6-days per week, for a fixed span of time, say a couple of months or so. This scenario bestows the employee with the entailment of compensatory-off in return for the extra hours of work put in. Based on the policies followed by their respective companies, the employees ‘responsibility lies in applying for the aforesaid off or pay judiciously and in accordance with personal convenience.


  • Supervisor or sanctioner – The supervisor is usually the person in-charge for a group or team of employees.  As the point-of-contact for this pre-decided group of the supervisor has the fundamental responsibility to overlook each and every activity of his team members. This includes the working hours and hence the subsequent leave or salary arrangements.                                                                                                               Another significant point to be considered by a supervisor or team leader is the project progress and work-load for the entire team.  In times of exceeding pressure of work-load or a strict time deadline, the supervisor cannot afford the loss of a single team member even for a few hours. Therefore, the responsibility of proper delegation of work and compensatory methods that can be possibly availed by the employees falls on the supervisor. In terms of granting the compensatory-off or even the extra working-hours payment, the supervisor of team leader here can be referred to as the sanctioner.


How can you avail compensatory offs?

Following are the general steps followed by any organisation in order to avail compensatory offs:


  • Compensatory off request

Upon working overtime, and when in the need of leave, an employee needs to apply for a compensatory off specifying the time period for which he/she will stay unavailable to the organisation.


  • Reviewing the request

The organisation reviews the compensatory-off request by matching it with the overtime information available in the database.

  • Matching the overtimes and offs

If the overtime period matches with the requested time period of the off then the compensatory off is granted to the employee.


  • Granting the compensatory off

If the leave request exceeds the time sanctioned for overtimes, then leave is granted only in compensation for the overtime work. For the rest of the requested leave time period, the employee is directed to search for other alternatives.


All the above policies and procedures may vary depending on the type of organisation and the type of designation of the employee.


How do the Compensatory-off impact employees?

The concept of compensatory-off, at its core, is a trade-off with the overtime pay for the eligible employees. The standard rules dictate that the employee must be paid according to the time-and-half basis, meaning the compensatory salary is paid at the rate of 1.5 times the current payment of the employee. In order to avoid payment of employees at higher rates, the compensatory-off acts as the perfect device. Some studies have also suggested that compensatory-off lead to reduction in employee income or greater working hours. These repercussions sound rather counter-productive, with respect to the original goal of the compensatory-off, in favour of the employees.


However, from a psychological and health-care standpoint, the compensatory-off arrangement works out well. The idea of compensation for over-work in the form of a leave often becomes a point of affirmative motivation to the employee. This works in the favour of maintaining a healthy work-life balance and thus, drives the employees into better efficiency on their workdays.


While the statistical analysis might seem contrary, compensatory-offs do have multiple benefits. The employers are saved the added payment of overtime salaries, at the incentive benefit of improved worker efficiency. The employee gains an extra day off, thus maintaining the balance between personal and professional life. In retrospect, one can conclude that compensatory-offs are a win-win situation, where both the employee and employer return satisfied from the negotiation.

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