How Should We Calculate Salary for a New Employee Starting Mid-Month? Seeking Advice!

Dear All,

How do you calculate salary for a person who has joined duty on the 18th of Feb 09? We have paid him for 11 days that he has attended the office (18th-28th Feb).

Normally, is the salary paid to the employee based on the number of days he has attended the office, or do we deduct the 18 days' salary from his net pay and pay him the balance?

For example:
Net Salary Rs. 8000
Pay for 11 days = 8000/30*11= 2933.33/- or
Net salary Rs. 8000
=8000/30*17= 4533.33 - 8000 = 3466/-

Do we pay him 2933 for the 11 days that he has worked, or Rs. 3466 after deducting 17 days' pay? Which calculation is normally practiced? We are a small company, and this doubt has arisen. Please explain.

Thanks

Dear Maxne,

To calculate the salary for a person who has joined duty on the 18th of Feb 09, you have to pay him for 11 days that he has attended the office (18th-28th Feb). Salary is paid to the employee based on the number of days he has attended the office. For example:

Net Salary Rs. 8000
Pay for 11 days = 8000/28*11 = 3142.85/- [Correct Practice]
Pay for 11 days = 8000/30*11 = 2933.33/- [Incorrect practice]
Net salary Rs. 8000
= 8000/30*17 = 4533.33 - 8000 = 3466/- [Incorrect practice]

Regards,
Khusro

Dear Maxne,

Here, you give 11 days' salary based on 28 days in February. Then why should you calculate it on 30 days in that formula? Here, you can also calculate it based on 28 days only.

Salary = 8000 * 11/28 = 3143
Salary = 8000 * 17/28 = 4857, 8000 - 4857 = 3143

This is the correct way to calculate the salary.

Hey, thanks guys, this is wonderful, and I'm clear now. One more thing: we normally practice to pay salary for 30 days, irrespective of whether it is 30, 28, or 31 days. Is this the right way to follow?

Let's say for the month of February, we must calculate for 28 days, and for March, it will be 31 days. Is that correct?

Dear,

This salary of $8000 is for 28 days in February and 31 days in March. So, you divide accordingly.

Thanks,
Js Malik

Dear Maxne,

The right practice is to consider the gross amount and not the net payment. Net payment may differ. For example, if Gross = 8000, then 8000 / 28 * 11 (18 - 28) = 3143. Then deductions like PF, ESI, and any other deductions, if applicable, need to be considered. The net pay has to be calculated based on this.

For salary calculations, the total number of days to be considered are 31, 30, or 28, as applicable.

Regards,
Venkatesh
Email: jesvenkat@gmail.com

Dear Maxne,

You are calculating like this:

1) Salary 8000, Present Days=31, Calendar days=30

then net salary = salary/calendar days*present days
= 8000/30*31=8266/-

2) Salary 8000, Present Days=30, Calendar days=30

then net salary = salary/calendar days*present days
= 8000/30*30=8000/-

3) Salary 8000, Present Days=28, Calendar days=30

then net salary = salary/calendar days*present days
= 8000/30*28=7466/-

See, the employee is present for the whole month in February, March, and April, but he is getting less salary in February, correct in April, and more in March. To avoid this, always calculate like this:

1) Salary 8000, Present Days=31, Calendar days=31 (March)

then net salary = salary/calendar days*present days
= 8000/31*31=8000/-

2) Salary 8000, Present Days=30, Calendar days=30 (April)

then net salary = salary/calendar days*present days
= 8000/30*30=8000/-

3) Salary 8000, Present Days=28, Calendar days=28 (February)

then net salary = salary/calendar days*present days
= 8000/28*28=8000/-

Regards,

Khusro

Hi,

I somewhat agree with Khusro. You have to calculate on Gross and have to take 30 as a base days.

Regards,
Devesh

Dear Devesh,

For salary calculation, we have to consider the number of days in a month and not assume 30 days for all months. For example, 30 days as 30, 28 days as 28, and 31 days as 31.

Regards,
Venkatesh
9841160500

I don't know how many are calculating salary for 26 days. In my company, we calculate salary for 26 days only. As per that, we can go the following way, i.e., 8000/26*11= 3384.61539. Net pay/total number of days*working days = pay value.

Dear,

Normally, the salary is calculated based on the number of days in a particular month. In the case where an employee worked for 11 days in February, their salary should be calculated by dividing the monthly salary by 28 and then multiplying it by the number of days present in that month. For other months, it would be 30 or 31 days, depending on the month.

Regards,
Manoranjan

Hi,

I hope your calculation is fine as the number of days is only 11 (including weekly offs). The calculation changes when the number of days exceeds 14 days, meaning 15 and above. The employee is entitled to get his complete HRA in that case, so the calculation changes.

By the way, you are calculating the actual gross. How about the deductions, dear friend? You need to consider them too (PF, ESI, Prof Tax, etc.).

I hope you got it right now.

Lakshman Kumar Grandhi

As per my knowledge, one should calculate the per day salary as monthly salary * 12 / 365 and then multiply it by the number of days worked. For example, if one is assigned a salary of 8000 and has worked for 18 days, then the calculation would be: 8000 * 12 / 365 = 263, which would be his per day salary. Therefore, his salary for 18 days would amount to 18 * 263 = 4734.00. It is important to note that this calculation applies regardless of whether the work was done in February or March. The company has appointed him with a monthly salary, and all components of his Cost to Company (CTC) will be calculated on an annual basis.

Your comments on this calculation are appreciated.

Thank you.
Deepak

Yes, I do agree with Mr. Deepak. For all practical purposes, taking the average per year is the correct procedure. It nullifies the difference in days in months.

Regards,
G.V. Rao

If we calculate the actual number of days in a month, the salary per day will vary each month. Some months, employees may receive less than the previous month. Is this practice legal?