Understanding Monthly Pay Calculations: How Do You Handle March's 28 Days and Employee Absences?

Monthly Calculation Period: 26th to 25th

Our company's month calculation is from the 26th to the 25th of every month. Hence, in March, 28 days will occur. For example, if an employee joined on the 31st of March and worked for the entire month, should we pay them for 28 or 31 days? If it is 28 days, how should we handle the remaining 3 days from February in the following month? This could raise issues related to PF, ESI, and PT.

Purpose of the Calculation Period

I am curious about the purpose of this particular calculation period (26th to 25th). Is it solely for leave calculation, or does it serve other functions as well?

Salary Preparation and Employee Presence

When preparing salaries after the 25th, can we assume that the employee will be present for the entire month? If the employee takes leave or resigns after the 25th without prior notice, how should we address this situation? Your prompt advice on this matter would be greatly appreciated.

Guidelines Needed

Dear seniors, our company's month calculation is from the 26th to the 25th of every month. Hence, in March, 28 days will occur. For example, if an employee joined on the 31st of March and worked the full days, should we pay them for 28 or 31 days? If it's 28 days, the balance of 3 days from February will be considered in the next month. This may pose issues regarding PF, ESI, and PT, among others.

We typically calculate in this manner (26th to 25th) for leave calculations. However, in terms of salary preparation, can we assume that the employee will be present after the 25th? What if the employee takes leave or resigns (without notification) after the 25th? How should we handle this situation?

Your prompt advice on this matter is greatly appreciated.

Regards,
Smith

You need not consider the days when you pay the salary. Whether it is 28 days, 30 days, or 31 days, you need to pay the full salary (30 days) if there is no LOP. In case there is any LOP, it will be divided by the number of days in that particular month.

If an employee joins on the 31st of March, his salary will be paid in the month of April only. This is because your salary calculation period is from the 26th to the 25th of every month.

This calculation of days will not affect any PF, ESI, or PT at any cost. So, you need not worry about it.

The purpose of calculating salary days from the 26th to the 25th is so that we can hold the employee's 5 days' salary for security purposes. As you mentioned, if an employee resigns after the 25th, the 5 days' salary will be kept on hold. Once he clears all the NO DUES to the company, the company can release his settlement.

I hope I have clarified your doubt.
Regards

First of all, tell me how you calculate salary in your organization. Is it salary / 30 working days * number of days present, salary / 26 working days * number of days present, or any other method?

Normally, the salary is calculated even if a person joins in the middle of a month. These calculations do not affect other contributions or deductions as per the law.

The pay period is typically determined by management specifications. There isn't a significant reason for the pay period to start from the 25th of one month to the 26th of another month. Some companies adopt this practice to manage employee retention or prevent absconding, as some portion of an employee's pay may be retained until final clearance is obtained from the relevant department.

Please let me know if you need further clarification.

Thank you.