Hello, Recently I joined a pvt. ltd. as a HR Executive. I have a query about salary calculation.

please tell me 1. How to calculate 20 days salary if someone joined in middle of month ????

2. what basis I calculated this salary??? Gross salary??? or CTC???

Please give me suggestion what I do in that situation.

Rupali Bokade

please tell me 1. How to calculate 20 days salary if someone joined in middle of month ????

2. what basis I calculated this salary??? Gross salary??? or CTC???

Please give me suggestion what I do in that situation.

Rupali Bokade

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Dear Rupali,

You've to calculate salary on the basis of Gross Salary. Simple formula to calculate salary is as below:

Gross Salary/number of days in a month(For e.g. 30 or 31) * Total number of payable days

This will bring Gross salary from which employee's share of PF & ESIC and PT is deducted which will bring his net salary.

Regards,

Manish

You've to calculate salary on the basis of Gross Salary. Simple formula to calculate salary is as below:

Gross Salary/number of days in a month(For e.g. 30 or 31) * Total number of payable days

This will bring Gross salary from which employee's share of PF & ESIC and PT is deducted which will bring his net salary.

Regards,

Manish

Ms.Rupali,

Firstly you think what Should Be The Base Days For Salary Calculation is it 26,30 or 31?

1. Calendar days

-In the calendar-day basis, the per-day pay is calculated as the total salary for the month divided by the total number of calendar days.

For example, if the monthly salary of an employee is Rs 30,000, and if the employee joins an organization on September 11, the employee will be paid Rs 20,000 for the 20 days in September. Since September has 30 calendar days, the per-day pay is calculated as Rs 30,000/30 = Rs 1,000.

In the above example if the same employee joins the organization on October 12 (instead of September 11) and works for 20 days in October, he or she would receive only Rs 19,354 (after rounding off) in October. Since October has 31 days, the per-day pay is calculated as Rs 30,000/31 = Rs 967.74.

2. Calendar days adjusted for Sundays

-In this method, the pay per day is calculated as the total salary for the month divided by the total number of calendar days minus Sundays.

For example, let us assume that an employee joins an organization in September which happens to have 4 Sundays. If the employee’s total monthly salary is Rs 30,000, and if the employee joins on September 11, he or she will be paid Rs 23,076 for the 20 days in September. Since September has 26 base days (30 minus 4 Sundays), the per-day pay is calculated as Rs 30,000/26 = Rs 1,153.84/day.

3. Fixed number of days, such as 26 or 30

In some organizations, the per-day pay is calculated as the total salary for the month divided by a fixed number of days, such as 26 or 30.

If an organization uses 26 as the fixed number of base days each month, an employee who joins on September 11 and whose monthly salary is Rs 30,000, will get paid Rs 23,076 for the 20 days in September; the per-day pay is calculated as Rs 30,000/26 = Rs 1,153.84/day

In the fixed days method, an employee, whether he joins or leaves the organization in a 30 day or a 31 day month, will get the same pay amount for the same number of pay days.

**In the above example, if the employee joins the organization on October 12 (instead of September 11), he would be paid the same amount of Rs 23,076 (for 20 service days) since both September and October are 26-day months from the point of view of payroll.

## What do the statutes say regarding base days?

The key statutes which refer to salary payment are The Payment of Wages Act, 1936, The Industrial Disputes Act, 1947, The Payment of Gratuity Act, 1972, The Shops and Establishment Act, and The Factories Act, 1948.

Surprisingly, none of the statutes except The Payment of Gratuity Act directly specify how many base days exist in a month.

1.The Payment of Gratuity Act states that the number of base days in a month shall be 26 for the purpose of gratuity calculation.

2.The Industrial Disputes Act, which deals with issues such as retrenchment salary, defines the term “average pay,” in case of monthly paid workman, as the average of the wages payable “in the 3 complete calendar months.” There is no explicit reference to how the per-day salary should be calculated.

3.According to the Minimum Wages Act, the minimum rates of wages may be fixed by wage-periods, namely, by the hour, by the day, by the month, or by such other larger wage-period as may be prescribed. In addition, “where such rates are fixed by the day or by the month, the manner of calculating wages for a month or for a day, as the case may be, may be indicated.” Here again, there is no reference to how the per-day wage should be calculated.

4.The Factories Act states that each worker shall have one day off (Sunday or any one of the three days immediately before or after Sunday) each week. However, the Act is silent on whether the weekly holiday should be a paid holiday or not. Hence, it follows that if the weekly holiday is a paid holiday, then the organization shall calculate the per-day pay on the basis of the calendar days in the month. If the weekly holiday is not considered to be a paid holiday, then the total base days in a month shall be the total number of calendar days in the month minus the total number of Sundays or any other weekly off days.

For example, if there are 4 Sundays (weekly off days) in September and October, the total base days in September shall be 26 (30 minus 4) and the total base days in October shall be 27 (31 minus 4).

5.The Shops and Establishment Act, legislated by the states in India, specify that employees should be given weekly holidays.

***As far as the Shops and Establishment Act and the Factories Act- the 2 statutes which govern the majority of the organizations in India – are concerned, it can be concluded that the base days for monthly salary calculation shall either be the calendar days in a month or the number of calendar days after deducting the number of weekly off days.

### A CASE OF OVER PAYMENT OF SALARY ###

Let us take a look at a numerical example which shows that a company, by following the 30-day calculation, could be overpaying its new joiners or exiting employees in a 31-day month.

An employee (new joiner or exiting employee), whose monthly gross pay is Rs 30,000, works for 10 days in the month of July (31-day month). The per-day salary in July as per company’s calculation is Rs 1000 (Rs 30,000/30 days). Hence, the company would pay the employee Rs 10,000 as salary (for 10 days) in July. If the company were to follow the calendar day logic, the per-day salary in July shall be Rs 967.74 (Rs 30,000/31 days) and hence for 10 days, the company shall be paying only Rs 9,677 (instead of Rs 10,000) in July.

*There are more 31-day months (7) than 30-day months (4) in a calendar year. The “over payment” will happen in 7 months (31-day months) in a calendar year.

Arguments in favor of the fixed-days method are fallacious. A typical argument we hear in favor of the fixed-days method is as follows.

Let us maintain consistency across 30 and 31 day months. Whether an employee joins on September 21 or October 22 (and hence works for 10 days) they should be paid the same salary.

Salary always calculated on Gross Earned per month and then gross earn divided by base days i.e.26,30 or 31.

Please read the above mentioned description and think about the base days for salary calculation.

Regards,

Amit

Firstly you think what Should Be The Base Days For Salary Calculation is it 26,30 or 31?

1. Calendar days

-In the calendar-day basis, the per-day pay is calculated as the total salary for the month divided by the total number of calendar days.

For example, if the monthly salary of an employee is Rs 30,000, and if the employee joins an organization on September 11, the employee will be paid Rs 20,000 for the 20 days in September. Since September has 30 calendar days, the per-day pay is calculated as Rs 30,000/30 = Rs 1,000.

In the above example if the same employee joins the organization on October 12 (instead of September 11) and works for 20 days in October, he or she would receive only Rs 19,354 (after rounding off) in October. Since October has 31 days, the per-day pay is calculated as Rs 30,000/31 = Rs 967.74.

2. Calendar days adjusted for Sundays

-In this method, the pay per day is calculated as the total salary for the month divided by the total number of calendar days minus Sundays.

For example, let us assume that an employee joins an organization in September which happens to have 4 Sundays. If the employee’s total monthly salary is Rs 30,000, and if the employee joins on September 11, he or she will be paid Rs 23,076 for the 20 days in September. Since September has 26 base days (30 minus 4 Sundays), the per-day pay is calculated as Rs 30,000/26 = Rs 1,153.84/day.

3. Fixed number of days, such as 26 or 30

In some organizations, the per-day pay is calculated as the total salary for the month divided by a fixed number of days, such as 26 or 30.

If an organization uses 26 as the fixed number of base days each month, an employee who joins on September 11 and whose monthly salary is Rs 30,000, will get paid Rs 23,076 for the 20 days in September; the per-day pay is calculated as Rs 30,000/26 = Rs 1,153.84/day

In the fixed days method, an employee, whether he joins or leaves the organization in a 30 day or a 31 day month, will get the same pay amount for the same number of pay days.

**In the above example, if the employee joins the organization on October 12 (instead of September 11), he would be paid the same amount of Rs 23,076 (for 20 service days) since both September and October are 26-day months from the point of view of payroll.

## What do the statutes say regarding base days?

The key statutes which refer to salary payment are The Payment of Wages Act, 1936, The Industrial Disputes Act, 1947, The Payment of Gratuity Act, 1972, The Shops and Establishment Act, and The Factories Act, 1948.

Surprisingly, none of the statutes except The Payment of Gratuity Act directly specify how many base days exist in a month.

1.The Payment of Gratuity Act states that the number of base days in a month shall be 26 for the purpose of gratuity calculation.

2.The Industrial Disputes Act, which deals with issues such as retrenchment salary, defines the term “average pay,” in case of monthly paid workman, as the average of the wages payable “in the 3 complete calendar months.” There is no explicit reference to how the per-day salary should be calculated.

3.According to the Minimum Wages Act, the minimum rates of wages may be fixed by wage-periods, namely, by the hour, by the day, by the month, or by such other larger wage-period as may be prescribed. In addition, “where such rates are fixed by the day or by the month, the manner of calculating wages for a month or for a day, as the case may be, may be indicated.” Here again, there is no reference to how the per-day wage should be calculated.

4.The Factories Act states that each worker shall have one day off (Sunday or any one of the three days immediately before or after Sunday) each week. However, the Act is silent on whether the weekly holiday should be a paid holiday or not. Hence, it follows that if the weekly holiday is a paid holiday, then the organization shall calculate the per-day pay on the basis of the calendar days in the month. If the weekly holiday is not considered to be a paid holiday, then the total base days in a month shall be the total number of calendar days in the month minus the total number of Sundays or any other weekly off days.

For example, if there are 4 Sundays (weekly off days) in September and October, the total base days in September shall be 26 (30 minus 4) and the total base days in October shall be 27 (31 minus 4).

5.The Shops and Establishment Act, legislated by the states in India, specify that employees should be given weekly holidays.

***As far as the Shops and Establishment Act and the Factories Act- the 2 statutes which govern the majority of the organizations in India – are concerned, it can be concluded that the base days for monthly salary calculation shall either be the calendar days in a month or the number of calendar days after deducting the number of weekly off days.

### A CASE OF OVER PAYMENT OF SALARY ###

Let us take a look at a numerical example which shows that a company, by following the 30-day calculation, could be overpaying its new joiners or exiting employees in a 31-day month.

An employee (new joiner or exiting employee), whose monthly gross pay is Rs 30,000, works for 10 days in the month of July (31-day month). The per-day salary in July as per company’s calculation is Rs 1000 (Rs 30,000/30 days). Hence, the company would pay the employee Rs 10,000 as salary (for 10 days) in July. If the company were to follow the calendar day logic, the per-day salary in July shall be Rs 967.74 (Rs 30,000/31 days) and hence for 10 days, the company shall be paying only Rs 9,677 (instead of Rs 10,000) in July.

*There are more 31-day months (7) than 30-day months (4) in a calendar year. The “over payment” will happen in 7 months (31-day months) in a calendar year.

Arguments in favor of the fixed-days method are fallacious. A typical argument we hear in favor of the fixed-days method is as follows.

Let us maintain consistency across 30 and 31 day months. Whether an employee joins on September 21 or October 22 (and hence works for 10 days) they should be paid the same salary.

Salary always calculated on Gross Earned per month and then gross earn divided by base days i.e.26,30 or 31.

Please read the above mentioned description and think about the base days for salary calculation.

Regards,

Amit

Hii

I really disappointed because views of my post is 87 but only 2 replies in there......

Many people have great experience in HR field then why it is happen?????

I need advise of expertise in HR... to improve my knowledge and skills..

But only 2 replies in there..

Please advice me......

I really disappointed because views of my post is 87 but only 2 replies in there......

Many people have great experience in HR field then why it is happen?????

I need advise of expertise in HR... to improve my knowledge and skills..

But only 2 replies in there..

Please advice me......

Dear Rupali,

Don't take to much worry about views and replies on your post as long as your query is solved or your logic is clear. I at times have not received a single reply on my query on this platform even though received more than 50 views.So, that's fine. You've to try to learn the things from other sources also. Don't get disappointed, always be positive.

Regards,

Manish

Don't take to much worry about views and replies on your post as long as your query is solved or your logic is clear. I at times have not received a single reply on my query on this platform even though received more than 50 views.So, that's fine. You've to try to learn the things from other sources also. Don't get disappointed, always be positive.

Regards,

Manish