Dear All,
There is lots of interpretation on the salary calculations, in the above case, if the payroll is run for the no. of days in the month, the following illustration will be found to incorrect.
for eg. One month salary for Mr.X is 6000 (Basic - 4000 + DA 2000)
The salary for 31days in Jan will be 6000 (6000/31*31days), his PF will be 6000/31*31 X 12% = 720 (i.e. per day PF will be 23.23)
But in the month of Feb his salary will be 6000 (6000/28*28days attended), his PF will be 6000/28*28x12% = 720. (i.e. per day PF will be 25.71)
Now check the PF contribution of Jan & Feb, the PF wages is increased. If the salary is fixed, the PF contribution should also be same. This difference will create a lot of problem in PF inspection.
So, as stated by The Industrial Employment (Standing Orders) Act, 1946 (Ref. model Standing Order) the salary should be calculated on 30days for Monthly rated employee and 26days for daily rated employee, to maintain the constant PF deductions & LOP of an employee.
Any further interpretation is welcomed.
Rgds,
Suresh Ramalingam
Consultant - Compliance