Human Resources Management

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Dear Friends,

I recently came across an issue raised by a very dear friend of mine working in New Delhi.

His company is a private limited company and has approx. 700 employees working in varioys retail outlets. His company has pay day on 7th of every month and attendance cycle from 1st of 30th of every month. In order to pay salary on 1st of every month, from this month onwards he wants to calculate attenance from 1st to 25th february 2008 so that we would be able to pay salaries to all its employees on 1st March. But he only wants to pay 25 days of wages which will result into problem with esi and pf contributions because there would be a shortfall of 5 days.

Now he is coming with another issue now he wants to pay full contributions to esi and pf for 30 days but paying all its employees wages only for 25 days because of which the take home of employees will decrease due to 5 days extra pf and esi contributions. Do you think can he really do that? I really don't think so. Please discuss/advise on this issue as soon as possible.


warm regards,

Umesh Chaudhary

([email protected])

From India, Delhi
These are all well settled issue in HR
Have the payment cycle from 26th to 25th When you changeover you may take a risk of making full payment for 5 or 6t days from 25 to 30 th
In trhe next month you adjust this and the cycle will fall in place
This is how all companies do
Jst check with any company closeby how they do
Let me repeat this is well established practice

From India, Chennai
Hi Siva,

Thanks you very much for your concern.

You didn't understand my question. I know about current industry trends i.e. attendance cycle etc. But my only concern is:-

1. They want to change their attendance cycle to 26th to 25th but to start off they need to first pay the salaries i.e. 1st-25th either with 5 days advance or deduction of 5 days payment. Paying 5 days salary is the general industry practice if a company wants to change their attendance cycle but here they don't want to pay 5 advance days salary instead they want to deduct pay of 5 days which means they only wish to pay salary of 1-25th only i.e. 25 days as a result there will be shortfall of 5 days of contribution towards ESI and EPF as PF financial year will be closed on 29th Feb this year.

Other solution he has come up with is he wants to pay full payments to ESI and EPF by paying only 25 days of salary to its employees but deducting ESI and EPF contribution for full month i.e. 30 days. I know this is not a general practice anywhere in India. What do you guys say about it? Is this possible?

warm regards,

Umesh Chaudhary

([email protected])

From India, Delhi
It is possible
Step i
Calculate salary from 1 to 30th
Step 2
Calculate PF and ESI for the full month
Step 3
Calculate 5 days salary
Step 4
Deduct this from the gross under special deduction head
But in this way, these 5 days PF and ESI will be calculated the next month again for the same period and you can not recover this. The amount so paid for PF and ESI will never be tallied.
That is why, logically, full months cycle need to be maintained
The only alternative mathod, is to adjust 5 days of leave from all employees There will not be any accounting entry and hence there wont be any accounting issue involved here
VBut you need to monitor these 5 days separately and at the time of encashment, adjustmnents can be made
This is the only plausible solution I can think of

From India, Chennai
Dear All, if the salary cycle is 1st to 30th can we make the payment on 15th of every month without any delay Regards, Shreyansh Sharma
From India, Mumbai
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