Can Basic Pay Change Monthly Based on Days Worked? Seeking Clarity on Statutory Requirements

Hi Friends,

I would like to know if Basic Pay can vary every month depending on the number of days worked. Is there any statutory requirement that Basic should be constant?

Regards,
Deepak S

Dear Deepak,

Yes, it will depend on the number of days you work in the month; accordingly, it will be calculated. Let us say my basic salary is Rs. 5000 per month. If I work four days in the month, does that mean I will get Rs. 5000 as my basic salary?

Regards,
Vipin:icon1:

Yes, basic pay can vary every month depending on the number of days worked. However, you cannot reduce the basic salary for a full month worked.

Suppose your standard basic is 10000/- for 30 days, then your salary calculation will be done on your standard basic only, but it can vary every month depending on your working days. Suppose you are absent for two days and you don't have any leave balance, so you will be applicable for LWP for those two days, and your salary will be deducted like this: 10000 - (10000/30*2). Then we can say our basic can vary.

Hi All,

It's a good question, I think Mr. Deepak wants to know. The number of days varies in every month; for example, February has 28 or 29 days, March and other months have 31 days, and some months have 30 days. So, in such cases, an employee will receive varied basic salary each month based on the number of days, even if they maintain full attendance. However, some companies provide a fixed basic salary for 30 days in contracts, regardless of the actual number of days in a month. They simply adhere to that standard practice, which is commonly followed in most companies here in the Kingdom.

Please correct me if I am wrong.

With Regards

Dear All,

Basic salary is a fixed element. We have to process the salary based on the number of working days and the number of actual days in a month. Please find the following examples:

Let us consider the basic pay as 5000 per month.
In Jan '09 - 31 days - Employee present 31 days, then 5000/31*31=5000.
In Feb '09 - 28 days - Employee present 28 days, then 5000/28*28=5000.
In Apr '09 - 30 days - Employee present 30 days, then 5000/30*30=5000.

Regards,
Venkatesh
9841160500

Hi Deepak,

Further to the thread of discussions on this matter would like to add that ;
Section 12 of Provident Fund Act 1952 states that Employer cannot reduce salary of the employees……………..
The extract of the bare act is provided below :
12. Employer not to reduce wages etc
No employer in relation to an establishment to which any Scheme or the Insurance Scheme applies shall by reason only of his liability for the payment of any contribution to the Fund or the Insurance Fund or any charges under this Act or the Scheme or the Insurance Scheme reduce whether directly or indirectly the wages of any employee to whom the Scheme or the Insurance Scheme applies or the total quantum of benefits in the nature of old age pension gratuity provident fund or life insurance to which the employee is entitled under the terms of his employment express or implied.
Therefore you cannot reduce the basic salary of the employee under the abovesaid act.
Regards,
Rajat

Dear Hassan,

Basic salary, once fixed, cannot be reduced. However, it is payable based on the number of days worked in a month. All deductions, such as GOSI, as per Saudi Law, will need to be followed.

You are correct that most employment contracts in the UAE/Middle East use a standard 30-day calculation for the payable salary. This simplified model does not include complications of deductibles or contributions towards PF, ESI, etc., which are common in India.

In India, the actual days of each English calendar month are followed to account for statutory deductions, the payment of monthly salary, and compliance with applicable wage laws. However, this practice is not followed in KSA.

Whatever is practiced in KSA is acceptable and compliant with the laws and federal regulations. The calculations are simpler, and charges such as visa fees, IQAMA fees (New/Renewal), etc., are easier to compute.

Rahul
Email: coordial@yahoo.co.in
Phone: 09968270580

Hi,

As per Indian law, basic pay can't be reduced in any case, but earned basic pay can be decreased depending on the attendance of the month.

Regards,
Arun

Dear Deepak,

The actual basic salary for any employee shall not be changed under any circumstances. Only the basic salary payable to the employee shall be changed as per the number of days worked in that respective month. There is nothing called basic salary should be constant. The actual basic salary shall be fixed and shall be made payable depending upon the number of days worked/payable.

For example, the gross salary for an employee is 12000/- per month, his basic salary is fixed at 6000/- per month. If the employee has served for 29 days in the month of March, then his salary payable shall be gross salary/31*29, and this will be computed as basic salary/31*29 + the other components/31*29.

Regards,
Amit Anand Gera
amitanandgera@in.com

Basic salary can vary based on the number of days you have worked. Companies don't calculate the basic for every month based on the number of days available, so they usually keep the same basics for all sorts of months in a year. You are correct, my friend.

Hi, Deepak,

This is an interesting discussion. I write to you from Trinidad where we have a seemingly different approach. Our system is heavily based on written contracts, and those contracts expressly state how persons will be paid. If one's contract states that he/she is hired and is to be paid on a monthly basis, it essentially means that unless the individual is terminated before the end of the month, he/she receives the agreed monthly rate each month. This applies whether the arrangement is permanent or temporary/contract. If, however, persons are hired on an hourly or weekly basis, they are paid only for the time worked, except where there are facilities for paid absences like sick leave, vacation, etc.

Angela.

Dear Deepak,

The basic pay (breakup) in your offer letter is taken as the master pay (main for calculation), and accordingly, your basic pay is calculated for the number of days you worked out of the total working days. So obviously, your basic pay can change. It's not just your basic pay; your other components can also change.

Lakshman Kumar Grandhi