Partner - Risk Management
Jr. Hr Manager
Taran Bhawsar
Manager Hr
+1 Other

Thread Started by #Taran Bhawsar

Dear all,

I am working as HR in an IT company from last 3 months. I am the first and only HR of the company, before me there was no HR Department in company. Earlier the Director of the company, himself calculated the salary by formula total salary/total no. of working days, but from last 3 month i was calculating salary by formula total salary/total no. of days in that month. Here is the conflict arrises and I and the Director had a healthy discussion over this topic, he told me to find out written rule in any of acts for calculating salary. Then I search on net, read Employments Acts like Minimum Wages Act, Payment of Wages Act, Company Act, Shop and Establishment Act etc. and even on citehr and found nothing in proof to support my view or boss view. From CiteHR discussions I concluded that both the method for calculating salary is right in their ways.

Now the confusion arrises in my mind ,It is mandatory to count any sunday or holiday or weekly off as leave if comes in sactioned leave period.

Now If we calculate salary by dividing total no. of working days (i.e. 26 days in general) that means we are not paying for sunday or holiday or weekly off.

Is it right to deduct leave or salary in lieu for the day (i.e. sunday or holiday or weekly off) we are not paying.?

I think its wrong, because ethically we should not deduct salary for day for which we are not considering in salary calculation.

Please help me out to clear my concepts.

Thanks & Regrads,

14th July 2014 From India, Indore
Salary is always fixed for per month/per annum basis, it is not fixed for working days. The Leaves are counted on yearly basis and is counted irrespective of Weekly Off/Holiday etc.
Last but not the least Leaves are not deducted from salary but it is paid as salary. Only LWP/LOP is deducted and that is counted only on working days and not on weekly off/ holidays
15th July 2014 From India, Ahmadabad
Somehow, i am not clear on what exactly you are asking. However, based on my understanding, I am putting down the options you have.

1. Salary is for a month (or year) as Saji said. So it means anyone who works for the entire month, gets the full salary irrespective of number of working days, weekly offs and holidays where the unit was closed.

2. Where a person took approved paid leave, he will still be eligible for the full salary

3. Where a person was absent or on Leave Without Pay, then you need to compute the amount to be deducted for number of days absent. This working is done by first computing a per day rate (Salary / 26) and multiplying that by number of days absent.

In the above working, since you are taking 26 working days, you are automatically paying for the weekly off by excluding it from the computation. Meaning, you are increasing the cost per day, to account for those not worked. There are a number of judgements on this saying that per day rate is computed by dividing salary by 26 days not 30 / 31 days. Even most of the minimum wages notifications issued by the state providing for dividing salary by 26 days.

You can opt for dividing salary by 30 days, but then you must count all weekly off and holidays as working, even though the employee has not come to work. In most cases, following this will mean that the employee gets more salary (do the mathematical working, you will understand). However, this is not the generally accepted practice in law.

In the end, you are in a small company and the employees are not going to raise an issue about a few rupees lost on either methods.
20th July 2014 From India, Mumbai
dear taran,
above all ans is right
i give u one example
if my salary is 10000
formula total salary/total no. of working days
=10000/26(excluding weekoff) =384.61 (near about 385)
formula total salary/total no. of days in that month
=10000/30 or 31 (including weekoff) =333.33 (near about 333)
so difference is 385-333=52
so that daily wages is increase Rs. 52/day.
if any other query or suggestion tell me.
20th July 2014 From India, Ahmedabad
Respected Saswata Banerjee,

Futher to discussion, as you said in your 3rd point,

"Where a person was absent or on Leave Without Pay, then you need to compute the amount to be deducted for number of days absent. This working is done by first computing a per day rate (Salary / 26) and multiplying that by number of days absent."

That I know and I agree with it.

but my concern is

My Boss is saying same as you said in point 3rd, that means we are excluding sunday or any Holiday of the month (and we are not paying for sunday or holiday) right? now if an employee went on leave (let assume it all leave without pay) from any saturday to next tuesday, so how much days of LOP I have to deduct from salary, My boss says 4 days (i.e. Saturday, Sunday, Monday & Tuesday) he supported his point by saying the labour officer from labour office instructed to include sunday or holiday in Leave in such cases, than I put my point that we should not deduct salary for the days we are not paying i.e. forsunday or any holiday with supporting point that it is not ethically right that if we are not paying for sunday or holiday how can we deduct for the same.

Hope my concern is much more clear to you. please give me your opinion and suggestions


25th July 2014 From India, Indore
My Dear Friend, LOP (Loss of Pay) LWP (Leave without Pay) are counted only for Paid days and not for Weekly Off's. Hence Sunday will not be taken as part of LOP/LWP.
LOP/LWP are only counted excluding the Weekly Off's.
If you still need any further clarification please feel free to call on the undersigned.
25th July 2014 From India, Ahmadabad
Thank you MR. Saji and Mr. Mayur for your opinions, please go through my previous comment and give me your valuable opinion and comments regarding my concern. Regards Taran
25th July 2014 From India, Indore
I have gone through your comment, just understand that Leaves (EL/PL) are counted/adjusted against No. of days (including W/Off and Holidays) as per the eligibility. But LOP/LWP are counted/deducted from the Salary only for Paid/working days (excluding W/Off and Holidays) I hope your query must have resolved. Please feel free to call me at 9586350505/9913895645 for any further clarification if required,
25th July 2014 From India, Ahmadabad
Thank you Mr. Saji,
Regarding LOP & LWP It is very much clear to me now, but in respect of EL/SL/PL is it ethically correct to Include week offs/ or holiday falls in leave period for counting or adjusting remaining Leaves if we calculate per salary as dividing by 26. this cost an extra EL deducted from employee's account for week offs or holiday that we are excluding in salary?
25th July 2014 From India, Indore
Hi Tarun. Please note regarding the concept of salary. It is not on per day worked basis- unlike in case of daily waged workman. For example, let us assume that my monthly salary is 50K. My office allows every weekend as off. I work whole of month July. In that case I will get whole 50K as my salary (here for the sake of a simple example lets assume there are no deductions); even though actual days worked would be 23.
In most simple terms, formula to calculate salary would be, total CTC (yearly) divided by 12. This amount will give you monthly salary. This needs to be paid out. If you divide this amount by 26, then you are in fact paying for less days than you are supposed to.
Any employee is entitled to weekly offs and it is as such a paid off-day. Hope I have made it clear to you.
25th July 2014 From India, Mumbai
Dear Mr. Aditya,
First of all, please dont mind My name is "Taran" Not "Tarun". Secondly We are paying full monthly payment in case an employee work for whole month and avail any paid leave. but in case of LOP/LWP we need to and have to calculate One day salary for deduction purpose that can only be calculated by dividing month's salary by no. of actaul working days or no. of days in month depends on companies policy. Because there is no written formula for calculating on month salary in any employment act Am I right? if any formula to calculate per day salary is written in any employment ACT than please let me know so that i can factually update my knowlegde.
25th July 2014 From India, Indore
You are cent per cent right, an EL is deducted for every W/Off and Holiday. Here the catch is that the employer can give any No. of Leaves either including/excluding as per the company policy, the ACT is silent here. Since the Act only states the minimum No. of Leaves in a year and not the maximum No. of leaves per year, the company cannot give less than what the ACT states about the leave. I hope you understand my view.
Hence if the employer is ready to compensate the leave against W/off and Holidays there is no harm, the company can go ahead with it (Policy)
25th July 2014 From India, Ahmadabad
First, understand the computation
You are deducting monthly ages by 26 not by 30. So that way you have already included wages of the weekly off in the working days. So you are not deducting wages for the weekly off. The per day rate has been increased to compensate for the weekly off. In effect you are paying for the weekly off.
By this is only for weekly off (4 Sundays a month) and not for holidays. Holidays are counted as working days. Else the markup on working days increases and changes each month, which is a bad idea.
The second point you are raising is called sandwich rule.
If there is a weekly off before / after the leave days, it is not to be counted.
However, if you have weekly off or holiday / festival day in the middle of your leave, it will be counted in the leave days. All offices follow this rule, as do most factories.

25th July 2014 From India, Mumbai
Respected Saswata Banerjee,

I agree that per day rate has been increased to compensate weekoffs (basicly we are not paying for week off we are compensating it by increasing per day rate right ?) and holiday should be treated as working day, but incase any employee have taken an LWP or Absent suppose on wednesday.

so to calculate LOP for that day

suppose his salary is 10000/pm

If i calculate per day rate by using 26

=10000/26 (excluding weekoff) = 384.61 (near about 385)


If i calculate per day rate by using 30

=10000/30 (including weekoff) =333.33 (near about 333)

so In case of 26 deduction is higher and lower in case of formula using 30 as dividing factor.

I think this is not in favor employee to deduct amount on higher end.

and in Sandwich rule it is costing an extra leave to employee from his leave account if we exclude week off in salary calculations

this case is also not in favor of employee.

My Boss says to use 26 as dividing factor in salary processing and follow the sandwich rule also.

should I follow my boss or raise my concern in front of him again?

can there any ethical issues or legal issues be raised by employees if I follow my Boss?
26th July 2014 From India, Indore
The courts take the 26 route and allow sandwich rule
Both are accepted practice.
In min wages act again, the 26 rules is applied, and also in supreme court decisions on Gratuity computation.
So your boss is right.
Sandwitch rule is standard in the industry, live with it.
In your example below, you are losing Rs. 50 more for bunking office for a day.
It hardly matters when you consider the employee gets a salary of Rs. 10,000. Impact is half of a percentage.
Smoke 4 cigarettes less...... and you would have made it up. :-)

26th July 2014 From India, Mumbai
Respected Seniors,
Thank you for your guidance , this discussion have cleared my concepts. and I have learned new concept too.
Can you please suggest me where I can find the details about Supreme court's decision regarding gratuity computation?
And Saswata Ji, I never smokes :) and for match up Rs. 50 I have to miss one movie for the month :)
Thanks & regards,
26th July 2014 From India, Indore
On a lighter note,
you get a movie ticket for Rs. 50 ????
Here its a min of Rs. 250
About the smoking, i think you were talking of the other employees, not your own, so i am sure some of them do smoke.
Any case its an incentive not to take unauthorised or unavailable leave.
About where to find the supreme court decision, just google and you will get the link and references.
If you really cant find, i will send you. But learn to use google. I will give you a hint, in case you are confused with number of cases, it was in AIR 1984
(in case you do not know, AIR = All India Reporter)

26th July 2014 From India, Mumbai
Respected Saswata ji,
Yes here in my city Morning shows starts from Rs. 50 in some multiplex. And i prefer morning shows instead of evening shows that can cost upto Rs. 250-300. As movie is same and multiplex is same so why spend Rs. 250 for services that we can get in just Rs. 50 :)
And about smoking I thought you were telling me as you used word "you", I apologies, its my misunderstanding.
Regarding supreme court decision, I googled but didnt got detailed information. I also read the discussion regarding this in Cite HR but didnt got satisfied, thank you for the hint Hope I will get what i want :)
Thanks & Regards,


26th July 2014 From India, Indore
Since you have tried, the judgement at the link is below
Jeewanlal (1929) Ltd.Etc. Etc vs The Appellate Authority Under The ... on 29 August, 1984

26th July 2014 From India, Mumbai
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