Industrial Relations And Labour Laws
Hr & Administration
Hr Professional With 8 Years Of Exp.
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Asst. Manager - Hr
Shish Ram Shivrayan
Hr, Ir, Law, Disc. Matters
Labour Laws And Financial Matters
Retired Chief - Ir
Hr Admin. In Recroitre Pvt. Ltd.
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.
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
Now dividing by 26 days
I think 4200>3929 off-course this is beneficial for employee.
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,
sumit kumar saxena,
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.
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.
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
Sr Manager (P&A)
Coca Cola Kolkata
You are right as per minimum wages act because we can not pay less than daily minimum wages like it
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
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?
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.
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".
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.
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.
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.
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...
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.
Thanks for initiating the thread.
S R Shivrayan
Sr. Manager HR & Admin
Derewala Jewellery Industries Ltd,
Asst Director (Retd)
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.
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.
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
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
Now dividing by 26 days
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.
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
Please comment on above to clarify.
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.
Many thanks for guiding us; lastly please clarify the below scenario:
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
Rs 6000.00 – (6000.00*9/31 days) = Rs 4258.00
Rs 6000.00 – (9 Days * Rs 231.00) = Rs 3921.00
Please suggest to clear this very important issue.
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