One of my colleague have taken VRS under the Scheme of the Company. His final settlement dues have been calculated & paid considering his salary ie Basic + Fixed DA + Variable DA as on 31/12/2013. However, he is actually relieved on 01/01/2014. He has been also paid salary for one day of Jan 14 separately with revised increase in Variable DA including one day Medical Allowance & LTA (which are paid annually in normal cases) and deducted towards contribution to EPF and ITax.
The question is that whether Company should have done the VRS calculations on revised salary of Jan 14 or whether they are correct in paying the compensation as above.