Is Calculating Monthly Salary on a 240-Hour Basis Legal? Seeking Advice on Compliance

Dear all, I have been requested by the company to calculate employees' salaries with 240 hours per month, which I don't know whether it is permissible by law. Please kindly advise. Thank you.

Method A

Basic salary: Rs. 30,000 per month
Attendance: 1 day absence in Feb
Salary for Feb: 30,000 / 240 hours * (240 - 8) = 29,000
Attendance: 1 day absence in Mar
Salary for Mar: 30,000 / 240 hours * (240 - 8) = 29,000

The past experience has told me that it should be:

Method B

Basic salary: Rs. 30,000 per month
Attendance: 1 day absence in Feb
Salary for Feb: 30,000 * 27 / 28 days = 28,929
Attendance: 1 day absence in Mar
Salary for Mar: 30,000 * 30 / 31 days = 29,032

So, which one is legally compliant? Or are both methods okay? Thank you.

You may find people working throughout the month without availing a weekly off in non-registered firms or elsewhere. However, this is illegal in any organized business setup. Weekly off is a right and is legally protected. Certain types of leaves and holidays are also rights as per prevailing labor laws. Therefore, it is illegal to reduce salary on the basis of absent days. You may need to refer to the concerned labor laws or consult your Legal Advisor.

Basic Salary Calculation

Basic Salary: Rs 30,000 per month

Attendance: 1 day absence in Feb

Step 1: Basic Salary / Number of days of the particular month: 30,000 / 27 = 1111

Step 2: Per day salary / Number of days of the particular month

Then Salary will be: 1111 * 27 = 29997

(Note: if Feb has 27 days, then divide by 27; if 28 days, then divide by 28)

Regards,
D. Justin

February has either 28 or 29 days in a year. I haven't heard if it has 27 days. Correct me if I am wrong.

Secondly, the method you have elaborated here is only half correct. In the second step, the daily salary is to be multiplied by the number of working days and not by the total number of days in the month. Step 1 is fine, where one has to divide the salary by the total number of days in the month.

When it comes to the calculation of salary, it should be based on the number of days in a particular month rather than on working hours. Calculating salaries based on working hours is not a common practice in organized establishments and is considered illegal, as it implies that your organization does not provide paid Sundays to its employees. This practice is unfair, as noted by Consultme.

Salary Calculation Method

Salaries should be calculated as follows:

Basic salary = Rs. 30,000/-

Case - 1

Number of Days in February = 28 days, so 1 day's salary is calculated as 30,000/28 = Rs. 1,071/-.
Number of leaves = 1 day, therefore the salary would be 1,071 x 27 = Rs. 28,917/-.

Case - 2

Number of Days in March = 31 days, so 1 day's salary is 30,000/31 = Rs. 968/-.
Number of leaves = 1 day, therefore the salary would be 968 x 30 = Rs. 29,040/-.

I hope this clarifies the matter.
Regards

Dear Mr. V,

Yes, what I mentioned there for February is wrong; instead of dividing by 28, I divided by 27. After dividing, considering the 1-day leave, it should be multiplied by 27. What you did is correct. Sorry, I mentioned the date wrongly.

D. Justin