Salary Calculation Confusion: How Do You Handle Different Working Days in a Month?

Dear friends,

I have one doubt in salary calculation. Kindly clarify for me. We have an ERP Payroll software that divides the salary using the following formula:

Fixed salary / 26 * (26 - LOP days)

This formula does not work properly in months with 27 or 24 working days. I suggested changing the formula to:

Fixed salary / Actual worked days * employee present days.

However, some did not accept this and proposed dividing by 30 days, while others suggested excluding Sundays.

Dear friends, how do you all calculate salaries for your factory? Kindly explain to me.

Best Regards,
Srinivasan

Dear Srinivasan,

Don't get confused.

Fixed salary / Actual working days of the month multiplied by Employee No. of present days.

Dear Srini,

Please ask him to write the law.

The 26 days' division is generally for the purpose of calculating daily salary, such as for Earned Leave (EL) calculation, etc.

Dear Friends,

Mr. Selvan is correct. As per the act, the formula is: Gross salary / Actual working days of the month X No. of present days (including offs & Leaves with pay). For overtime calculations, we have to consider 26 days.

Thanks & Regards,
Virender Singh.

Dear All,

Salary will be calculated as follows: fixed salary divided by actual days in a month (31 or 30) multiplied by the number of days worked. This is the correct way to calculate salary.

Regards,
Venkatesh

Dear Mr. Venkat,

One employee will be on leave from Wednesday (March '04) to next Saturday (March '13). Will you include the Sundays of March '8 and '15 in the salary or not?

Dear Selvan,

If the employee is absent from March 4th to March 13th, the leave will be 10 days, including Sunday. If the company policy allows you to calculate Sunday, then 9 days will be the leave days.

Regards,
Venkatesh
Email: jesvenkat@gmail.com

Dear Abhishek,

Salary can be divided into Basic, HRA, Conveyance, Medical Reimbursement, Leave Travel Allowance, Special Allowance, Variable Pay, Mobile Allowance, Education Allowance, Books, and Periodicals. Kindly review and adjust the components as per your company's policies.

Regards, Venkatesh

Dear Abhishek,

Salary can be broken down into Basic, DA, HRA, Conveyance, and Other Allowances (There are many allowances available). Generally, Basic may be 40% to 60%. DA will be fixed by the Government every year in April as per the Price Index. HRA may be 50% of Basic. The remaining parts may consist of Other allowances. Note: There is no specific rule for salary breakdown. This is a commonly practiced method.

Thank you.

But, to my mind, if we consider the number of working days of the company to calculate the salary, then the following problem will arise:

1) The number of days in each month keeps changing, i.e., 28, 30, 31; hence, it will be very difficult to calculate the exact salary.
2) The employee is offered a monthly salary of ____, which means that irrespective of the number of working days of the company, he/she will be given a monthly salary as per his attendance for that month.

What I think here is that the number of working days of the company should be fixed at 30 always; hence, the formula would be - (fixed salary / 30) * No. of days worked.

Your comments, please....

Thanks,
Piyush

Hi,

It's very simple. You can add many heads according to your company requirements, like basic, HRA, city compensatory allowances, washing allowance, children allowance, special allowance, and so on.

Regards,
Ritu Bhatnagar

Dear Srinivassan,

To calculate one day's salary, it is always divided by 30 (normal days in the month), and for an individual, the same can be calculated by multiplying the number of days actually worked.

Vinay

Dear colleagues,

We are a pharma marketing company. Most of our Medical Representatives are covered under the ESI scheme due to salaries below Rs. 10,000. We want to include their daily allowance of Rs. 120 per day in their salary to exceed the Rs. 10,000 limit so that they will be exempt from ESI. The question is, is this possible, and if so, under which head can we add it to the salary? Please reply to me.

Thanks,
T. P. Panda

Dear Abhi,

The breakup normally used is:

(A) Monthly Salary

a. Basic: 49% of total

b. HRA: 40% of the basic

c. Conveyance Allowance: Rs. 800

d. Special Allowance: flexible

Total Monthly Salary: aggregate

Regards,
Vineet

Dear Mr. Virender,

I would like to clarify with you how overtime calculation is done for the month of February. The same 26 days are taken into account.

Regards,
Suman

Hello everybody,

This is Sudhir, and I want to know about earning leaves - how to make the EL of the employees.

Hi,

I agree with Mr. Selvan. For better understanding, I am sending a .doc file which I prepared in reply to auditors' objections on the subject for one of my clients. I hope you find it useful.

Bye,
Puneet Gupta
Labour & Industrial Law Advisor
Ludhiana

National Holiday on a Weekly Holiday

If a national holiday falls on a weekly holiday or Sunday, do we need to pay wages to employees for the extra day?

Example:
Suppose in October, the working days are 26, and there are 5 Sundays. If the national holiday 'Gandhi Jayanti' falls on a Sunday, should we pay wages for 26 days or 27 days?

Our SAIL-RSP insists that we have to pay wages for 27 days. We believe they are wrong. In which labor law can we find details to show them?

Please help us!

Regards,
Santosh Gupta
[Phone Number Removed For Privacy-Reasons]
Rourkela