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Thread Started by #Manish Gadre

Dear All
I have come across an interesting situation as follows:
Our employees are permanent employees employed for a specific monthly salary. On the pay slip it is shown that the employee has worked for 26 days and 4 week offs. The Labour Inspector is saying that we cannot divide the salary of employee by 30 days and it need to be divided by 26 days. The logic he is giving is as per law, after working for 6 days the employee is entitled for 1 day week off and hence we cannot claim that we are paying for the employees week off day also. If I divide the monthly salary by 26 days then daily rate of wages go high. What is your opinion???
14th July 2011 From India, Mumbai
For monthly paid employees, it is being divided by the No. days in the particular month. This practice is being followed in many companies. Pon
14th July 2011 From India, Lucknow
Dear Manish,
Its an interesting topic to be discuss; I hv worked in many industries but every where d rule is to divide the monthly salary wid 30 days not 26 days. As per labour law its true that working for 6 days, the employee is entitled for 1 day week off but its paid hoilday. Yes but if you pay salary on daily wages basis you have to show salary of 26 days. As per my view if employees is getting specifed monthly salary thr is no such rule but if its on daily wages thn it is calculated on 26days in a month. I think this topic already has been discussed in this form. Its good that we discuss such type of issue in this forum caz I think every HR has smwhr in thr career time came across wid such sitution.
Best Regards
14th July 2011 From India, Surat
well what i have studied and wht’s been implemented in my organisation is that the salary is to be calculated from working days after leaving off-days.
14th July 2011 From India, Chandigarh
Dear Manish
Monthly salary to be divided by 30/26 is really confusing. This one is vary organization to organization. But I think if you pay more than as legal requirement then there is no problem.In our orgs. we calculate OT/Gratuity by dividing 26days, otherwise 30days.
For example one employee monthly salary/wage is 6000/-per month and in any month(30days) he worked 15days and avail 2 leave with wage and 4 w/off then total pay days is 21days. Now we calculate their salary by dividing 30days
paid salary=6000-(6000/30)*(30-21)=6000-200*9=6000-1800=4200
Now dividing by 26 days
paid salary=6000-(6000/26)*(26-17)=6000-230.76*9=6000-2077=3923
I think 4200>3929 off-course this is beneficial for employee.
Thanks
Manish
14th July 2011 From India, Bangalore
It is common that for deciding daily wage the monthly wage is divided by 30 irrespective of whether the month has 30, 31 or 28 days. However, for calculating gratuity, it is to be divided by 26 only. Similarly, for finding out the retrenchment compensation as per Industrial Disputes Act, the salary is to be divided by 30.
Regards,
Madhu.T.K
14th July 2011 From India, Kannur
Dear Manish,
Greetings for the day,
Yes labour inspector is right monthly salary should be divided by 26 instead of 30, 31, 28 or 29 take the example of minimum wage of any state you will find the avarage daily wage is calculated by basic+da/26 instead of 30, 31, 28 or 29 days.
thanks & regards,
From,
sumit kumar saxena,
9899669071, 0120-4131277
14th July 2011 From India, Ghaziabad
Dear all

How to calculate the daily wage will differ from establishment to establishments depending upon the law applicable to it, namely whether it is the Factories Act or the Shops and Establishments Act or the Mines Act or the Planatation Labour Act or the Motor Transport Workers Act. The only exception to this rule is the Payment of Gratuituy Act where it is provided that the monthly wage should be divided by 26 to obtain the daily wage. Take for example the Factories Act. This Act says that that first day of the week shall be a holiday for the worker, that is in other words, the worker should have a weekly off day. But the Factories Act does not say that the weekly off should be a paid weekly off. Therefore, if the employer wants to calculate the daily wages he has to divide the monthly wage by 26. If the Tamilnadu Shops and Establishments Act is considered, this Act says that every shop or establishment should be closed for a day in a week and also says that no deduction should be made from the wages of every employed person in a shop/establishment on account of any day or part of a day on which a holiday had been allowed under the Act. This simply means that in the case of a monthly paid employee in a shop or establishment to arrive at his daily wage, his monthly wage should be divided by 30/31 and in the case of a daily paid employee he should be paid for the days on which the shop remains closed. The provisions of the Plantation Labour Act is similar to the Factories Act. This Act provides for a rest day in every period of seven days to all workers but does not say that the worker should be paid wages for the rest day. In the case of Factories and Plantation what sometimes happens is that whenever long term agreements are reached, these agreements may provide a weekly off with wages. In such cases, to arrive at the daily wage the monthly wage has to be divided by 30. Even in this case for calculating gratuity under the Payment of Gratuity Act the monthly wage has to be divided by 26 to arrive at the daily wage. In cases where the Government fixes minimum wages for any schedule employment under the Minimum Wages Act and if notification specifically provides that wages have to be paid for weekly holidays also, then to arrive at the daily wage the monthly wage has to be divided by 30. The retrenchment compensation payable under the Industrial Disputes Act is equal to "fifteen days average pay for every completed year of continuous service-------in excess of six months" The term "average pay" is defined under section 2(aaa). Based on this definition the "average pay" has to be calculated and based on this calculation the retrenchment compensation is to be computed.

With regards
14th July 2011 From India, Madras
I totally agree with V.harikrishnan sir With regards sarvesh shukla HR Executive Sodexo india
15th July 2011 From India, Gurgaon
Dear Manish & others, Are you paying as per Minimum Wages notified. In that case the monthly wages is a multiple of 26, indeed everyday's wages is the wage for 1&1/6 day's wages so that at the end of the sixth day the wages of 7 days are made up. So you don't have to pay for the weekly off day. In fact if you divide the monthly min. wages by 26 you will get the daily wage rate. But in other cases where you pay an amount higher than minimum wages the daily wages could be computed by dividing by the number of working days in that month. For example if someone is absent for 5 days without pay, the deduction would monthly wages divided by the number of days in the wage month multiplied by 5, the number of days of absence. Harikrishnan has already elaborated on the other aspects. Regards KK
15th July 2011 From India, Bhopal
Hi good morning
My question is suppose employee worked only 22 days but total days is inlcuding W/off is 22+4(W/off) =26 can he get full salary when the salary calculation on basis on 26 days or he will get only 22 days salary when we working on 26 days in month. in other words he can not availed paid leave due to zero balance paid leaves.
15th July 2011 From India, Nagpur
Dear Friends,
The salary paid should be for 26 days and monthly salary is fixed by hours . As we calculate the Gratuity / by 26 days like this. The reason :
1. In a month there will be a possible working hours like 26 days X 8 hours daily. Hence it is coming 208 hours again when it is for 27 dyas 27X8 hours. The possible working hours is an important factor. Now if you want to deduct 2 hours salary you can do it if a person works 1.5 hours OT you can pay it.
In a manufacturing Organisation Production is on hours basis. If you want to pay the production Bonus then again you need to know the person worked how many hours in a month 208 or 200.
Thanks to all
Siddhartha Guhathakurta
Sr Manager (P&A)
Coca Cola Kolkata
siddhartha @diamondbev.in
15th July 2011 From India, Calcutta
Thanks to Mr.Hari Krishnan for sharing your views on thos topic, we look forward for more inputs from you Sir. With Warm Regards, Sreehariprasad.n Manager HR dhli Super Specialty Hospital
15th July 2011 From India, Lucknow
Logically the view of labour inspector seems correct though most offices follow the 30 day rule. I think it time we correct it and start following the 26 working days in the month rule.
15th July 2011 From India, Chakan
First of all i would like to congratulate to the creator of this forum its the optimum utilisation of the technology. keep it up.. and i want one favour also. hey am a Civil Engineer any one can tell me ki if any civil engineer forum are also there?
plz reply
15th July 2011 From India, Mumbai
Please go through state minimum wages notification ,as per haryana ,punjab and delhi minimum wages notification one can clearly inter prate that to calculate minimum daily wages we are to divide minimum monthly wages by 26 .
regards
atul
15th July 2011 From India, New Delhi
Please go through state minimum wages notification ,as per haryana ,punjab and delhi minimum wages notification one can clearly arrived that to calculate minimum daily wages we are to divide minimum monthly wages by 26 .
regards
atul
15th July 2011 From India, New Delhi
Dear Atul
You are right as per minimum wages act because we can not pay less than daily minimum wages like it
Any Helper
Monthly Wages 4503.00
Daily wages Rs. 173.19
So we can not pay less than 173.19 for any working days
But incase of high salary we can calculate the salary by 30 and 31 also I think there is no problem
15th July 2011 From India, New Delhi
Thq u for sharing harikrishnan sir. i have 1 confusion b/w wages & salary. we professionals are given salary, does that mean these laws should not be applicable on us? Which level employees are given wages & which level are given salary? Pls clear..
15th July 2011 From India, Bhopal
I if take 2 days leave on per month , daily wages calulation based no of working days or total days in a month.
if based on no of working days say 26 then loss of pay will be higher, if based on total days in month, loss of pay will be less. What will be correct procedure for loss of pay calculation?
thank you
Anand.E
15th July 2011 From India, Coimbatore
Dear Manish,
Generally if we salary devide by 26 days employee's daily wage will be high comparision with 30 days, if employee take leave 2 or 3 days except sunday his deduction will be more than 30 days, so salary devide by 30 is beneficial for employee.
With Regards,
Manish Dave
HR Manager
Balaji Construction
15th July 2011 From India, Pune
Dear Reemawadhwa
There is no difference between the terms "salary" and "wage". Both are the same. The applicability of any labour law has to be decided with reference to the provisions of that particular law and not on the terms "salary" or "wage".
With regards
15th July 2011 From India, Madras
I think there is a confusion in his mind with regards to gratuity act, wherein the calculation is based on 26 days. In case of monthly wages/ salary payments, it is usually calculated on the based of actual No. of days of the particular month. But, in smoe organsiations, for the sake of simplicity, it is taken standard as 30 days (including for the month of February). Take an example : If a person has worked upto 20th of a particular month, which is not a week-end, i.e. Saturday, then he would be eligible for wages upto 20th only on pro-rata basis. But in case 20th happens to be Saturday, then, in that case he would be paid wages for Sunday also, provided he hasactually worked for the full week (preceding days). In case he has been absent during the week and he is not entitled to leave, wages for that day would be deducted as well as he would not be entitled for wages for 21st. This is a logical approach which may be taken
Regards
S.G. Bhavnani
15th July 2011 From India, Delhi
Dear Mr.Santhoshharshe Please read my first post in this thread. Wages for weekly off depends on the Act applicable to the establishment in which the worker is employed. With regards
15th July 2011 From India, Madras
Dear all,
How to calculate the daily wage will differ from establishment to establishments depending upon the law applicable to it, namely whether it is the Factories Act or the Shops and Establishments Act or the Mines Act or the Planatation Labour Act or the Motor Transport Workers Act. As I am working in a Mine, in ours Factory Act, Shops and Establishment Act, Mines Act are all applicable.
In my organisation, Executive are calculated as per 30 days and Non Executive are calculated as 26 days, whether as be Monthly Rated, Time Rated / Daily Rated and Piece Rated (As Piece jobs are not there but designation is).
I think it also depends on Union and Management Relationship too.
15th July 2011 From India, Raigarh
Dear ALL,
if at all we go through the notification regarding the minimum wages issued ,we can find the answer . in the notification itself two rates are given 1)Total wages payable per month 2)Daily rate of wages per day.secondly we can not pay less than the minimum wages.
for example in AP the skilled monthly rate is 6922.00 and daily rate is 266.23 .you can find that the daily rate is arrived by calculating the daily rate *26 days.this is as simple.
16th July 2011 From India, Vijayawada
Salary rule is to divide monthly salary by 30 days not by 26 days which is quite logical as well.
As per labour law every employer is bound to give one paid leave after 6 working days, that means employer paying for 30 days not for 26 days. so it will be divided by 30.
16th July 2011 From India, Ghaziabad
Dear All,
It is really confusing.
What people are apparently worried is that if they follow the labor inspector's advice, the costs will go high.
It boils down to we are more concerned with keeping the costs that complying with the Law and the spirit of the law. Are we not splitting hair? Death and Tax cannot be avoided... Either we try to comply or "save" in the short run, and later pay a hefty penalty.
If law is silent, then the section needs to be viewed from the spirit instead of the letter...
Regards,
AK
16th July 2011 From India, Bangalore
Hi Manish, For monthly rated employees, the monthly salary is divided by the number of calendar days in a given month and not 26. Regards
16th July 2011 From India, Mumbai
My opinions are against the labour officer. If this calculation is for an employee working on a monthly wage then it should be divided by 30. Since the holiday is a paid one. If an employee reports to work on that day we have to pay him at the of 150 per hour, which is how you pay when someone works over time. Does the labour inspector mean that in the months where there are many off days for either Diwali/on other occasions do we calculate their wages for that month as salary/25 or /24? This is ridiculous. Divisible by 30 days is also widely accepted world over even if the month has 31 days.
However if you need to determine how to calculate the daily wage for a temp emp or one who works on hourly basis, then divided by the exact no. of days worked is acceptable.
16th July 2011 From United Arab Emirates, Dubai
Though, the subject is amply dealt by various experts, here I would like to mention the difference how it affects the employees. Assuming, we calculate the salary on 30 days basis then employee will be benefited for his/her absence whereas will be losing for his overtime payments and in case of 26 days calculation it will be vice-versa. The another point here is employees who are drawing Minimum wages and calculated on 30/31 days basis will not be getting the overtime as per minimum wages and hence the organization will be defaulting on Payment of minimum wages.
Thanks for initiating the thread.
S R Shivrayan
Sr. Manager HR & Admin
Derewala Jewellery Industries Ltd,
Jaipur
16th July 2011 From India, Jaipur
I fully agree with what Mr Harikrishnan said. If he is monthly paid employee his salary has to be devided by 30/31 for making loss of pay for the days not worked if any. If he is daily rated employee, the minimum wage as notified by the Government has to be devided by 26 only and accordingly his total wage will be calculated on the number of days worked. The logic behind it is only to cover up the weekly holiday. As per the provisions of the Shops & Estt Act or Factories Act, an employee is entitled for one day weekly holiday after working for six days. For the monthly paid employee we are allowing the weekly holiday for him where as it is not there in case of daily rated employee. To cover up the provision of weekly holiday, the monthly rate has to be devided by 26 in the case of daily rated employee whereas the monthly rate is to be devided by 30/31 in case of monthly rated employees since the monthly rated employees are enjoying the weekly holiday. In other words, the monthly paid employee will work for 26 days only and he will get the salary for full month by including four weekly holidays. This facility may not applicable to the daily rated employee, hence to cover up the weekly holiday, his salary is to be devided by 26 only instead of 30/31 as in the case of permanent employees.

with regards

sanagapalli VR

Asst Director (Retd)

E.S.I.CORPORATION
16th July 2011 From India, Hyderabad
Dear Joanna.fds
The Labour Officer cannot have an opinion contrary to law. If you feel and are sure that he is wrong or incorrect please try to give the correct position based on specific provisions of the law applicable to an establishment. The overtime rate specified by you is also not correct. If it is correct then tell the provision of the law which says that the worker should be paid 150 per hour. If while calculating the daily wage for a monthly rated employee if your calculation is more than what should be paid under law, your employer may not tolerate the mistake. Similarly if you calculate less than what should be paid under law for one day in the case of a monthly rated employee/worker the concerned individual worker or the union to which he belongs will not keep quiet.
With regards
16th July 2011 From India, Madras
Dear All,
The logic for dividing the salary/ wages by 26 was explained to me by one Senior consultant as follows.
Total number of days in a year 365 - 52 Weekly offs = 26.08
As the remaining days are slightly more than 26 it is divided by 26, this logic also applies in a leap year.
In case an employee works on a Weekly off the employer pays double wages. In the event you are dividing the salary/ wage by 30 then you will be actually paying for the Weekly off and end up paying three times the normal salary/ wage in case he works on a Weekly off as you will have to pay double wages as per act.
To arrive at the daily wage the Minimum wages act follows the 26 days pattern and the same is reflected in Gratuity act too.
The employee in fact does not stand to loose irrespective of the month.
M.V.KANNAN
17th July 2011 From India, Madras
Hi
As we all know that every emploee is entitled to have one off each week. It means we are paying for off as well.
If u wud like to calculate one day actual salary it sud be divided by 26 not by 30 since employee is paid for off days as well.
I.e. Mr X per month salary is Rs 5000 that is for 30 or 31 days as the case may. This also 4 offs but his per day salary is 5000/26 since he works 26 days only
17th July 2011 From India, Mumbai
Hi Manish, It should be calculated by the no of days the month have, divided by the no of working day. ignore weekly they are inclusive. No other rule. regards Amit Asst. Manager HR
17th July 2011 From India, Amritsar
An employee with monthly salary gets same salary irrespective of number of days in the month....whether it is Febraury with 28 days or March with 31 days.....because it is monthly salary...so it is evident that the salary should be divided by the number days in the month....for deductions in March would be lower than deduction if the same is applied in month of Febraury.
18th July 2011 From India, Delhi
If you calculate per day wages, then divided by 26. If you calculate monthly wages, then multiple by 30. It is as per rule. Regards Ramesh
19th July 2011 From India, Tirunelveli
So, in case of monthly paid employees we need to divide salary by month days (30/31 days) and in case of daily wages employees we need to divide by 26 days.
19th July 2011 From India, Kota
As per my opinion, it must be follow in each and every company, an institution also. through this the employee of the organization would improve and enhances the productivity and efficiency.
19th July 2011 From India, Delhi
Hi Kavee_ta
I am HR in a construction company in Pune.We have our power plant project doing in Raipur and Cement silo project in K'taka.Kindly let me know if you or any of your collegue is interswted.
For more details kindly contact on

22nd July 2011 From India
Very useful discussion thread. I need to know when we are deducting salary on account of LWP, do we in that case take 30/31 days or 22 days( we have 2 days weekly off)?? Salary is paid monthly.
Kind regards,
Anjali Verma
27th July 2011 From India, Delhi
Hi...

Taking the calculations by Manish as below:

"For example one employee monthly salary/wage is 6000/-per month and in any month(30days) he worked 15days and avail 2 leave with wage and 4 w/off then total pay days is 21days. Now we calculate their salary by dividing 30days

paid salary=6000-(6000/30)*(30-21)=6000-200*9=6000-1800=4200

Now dividing by 26 days

paid salary=6000-(6000/26)*(26-17)=6000-230.76*9=6000-2077=3923"

What is really the correct practice as per law?

As we refer Sumit " minimum wage of any state you will find the avarage daily wage is calculated by basic+da/26 instead of 30, 31, 28 or 29 days"; the wages rate calculation based on "basic+da". So how one can calculate salary including various allowances on months basis?

Does the terminology Minimum Wages Rate have the symbolic importance to derive a figure and place it on the board usually placed in the front of the office as per the requirement under the shop act.

Dear experts please unbundle the jugglery of min wages rate.
27th July 2011 From India, Jaipur
Dear Mr.Jain
The correct practice to arrive at the daily wages of a monthly rated employee according to law and approved by the Honourable Supreme Court in Jeewanlal's case is to divide the monthly wages by 26 and not by 30.
With regards
28th July 2011 From India, Madras
Dear Mr. Harikrishnan
Can we clarify ourself that the matter is to calculate the daily wages of a monthly rated employee is to divide the monthly wages by 26 and not by 30. But as far as the monthly wages calculation is concerned; it should done in the usual manner i.e. as illustrated below:
"For example one employee monthly salary/wage is 6000/-per month and in any month (30days) he worked 15days and avail 2 leave with wage and 4 w/off then total pay days is 21days. Now we calculate their salary by dividing 30days
paid salary=6000-(6000/30)*(30-21)=6000-200*9=6000-1800=4200"
Please comment on above to clarify.
28th July 2011 From India, Jaipur
Dear Mr.Anurag Jain
Before answering your query I would like to pose one issue for you to analyse and respond. I am giving you a hypothetical situation which is as follows. If an employee avails leave on loss of pay (availing leave on loss of pay is assumed) for fifteen days in a month consisting of 30 days, will you deduct wages for the weekly holidays also which(at least two) would fall within the fifteen days of leave on loss of pay. If your answer is 'YES' for this hypothetical situation then please indicate the statutory authority based on which you would deduct wages for such deduction.
With regards
28th July 2011 From India, Madras
Dear Mr. Harikrishnan,
Many thanks for guiding us; lastly please clarify the below scenario:
Employee A:
Days worked in July 11: 22 days (from date 1 to 22 July 11 inclusive of 2 leaves taken )
Leaves taken: 2
Leaves in credit: 2
Paid holidays pending after 22 July 11: 2 Sundays
Short Days: 31 Days – 22 Days worked = 9 Days
Monthly salary: 6000.00
Minimum Wages calculation: Rs 6000.00/26 = 231.00
Wages calculation:
Rs 6000.00 – (6000.00*9/31 days) = Rs 4258.00
or
Rs 6000.00 – (9 Days * Rs 231.00) = Rs 3921.00
or
any other
Please suggest to clear this very important issue.
Kind regards,
Anurag Jain
28th July 2011 From India, Jaipur
i totally agree with Ms. Vandana. acc. to law wages are to divided by 26 days n if monthly salaried paid will be divided by 30 days. this practice is followed in most of the compnaies
with regards
Neha Gupta
Assistant Manager HR
28th July 2011 From India, Delhi
Dear Mr.Anurag Jain
In the example cited by you
How many days worked by the employee in July 2011
How many days leave with wages availed in July 2011
How many days leave without wages availed in July 2011
How many days of weekly off he had during July 2011
What is the law relating to working conditions applicable to the industrial establishment in which the employee was working(like Factories Act, Shops and Establishments Act etc.,)
If you are kind enough to furnish the above information I will try to answer your query
With regards
28th July 2011 From India, Madras
Dear Ms.Neha Gupta Can you kindly indicate the 'law' referred to in your last post With regards
28th July 2011 From India, Madras

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