Confused About Salary Calculation Dates? Let's Clarify How It Works!

Can anyone guide me on how the salary is calculated? In some cases, I heard it is from the 26th to the 25th, and in others from the 1st to the 31st. If it is calculated from the 26th to the 25th, will it be from the 1st to the 30th/31st of the current month, or would it be calculated from the 26th to the 25th?

Dear Meghana,

Salary calculations depend on the month. For example, if January has 31 days, you divide your salary by 31. In another case, if June has 30 days, then you divide your salary by 30. In the case of overtime, you divide the salary by 26.

Example:

For the month of January:

Salary: 6000

Working days: 26

Rest days: 5

Total Pay Days: 31

Overtime: 4 Hours

Salary = (6000 / 31 * 31) + (6000 / 26 / 8 * 4) * 2 = 6231.00

For more clarification, feel free to call me.

When the salary calculation is from 26 to 25, you are paid in full for the month, and the remaining 5 or six days are considered as if you would be present. If the employee is not present for the next 5 days, it is adjusted in the next month's salary. This is for the speedy process of salary calculation for your payroll department.

Dear Rasheed,

In an MNC, salaries are processed on a pro-rata basis. In case someone is not present during a period, the adjustment can be made in the calculation for the following month.

Kind regards,

[Your Name]

Dear Meghana,

Salary depends upon the type of payment, i.e. if a worker is on daily wages, the wages should be divided into 26 days. Otherwise, if he is paid a monthly wage/salary, it depends upon the month's days.

Secondly, in most companies, for the easy and prompt payment of salary on the 1st day of the succeeding month, attendance closing would be made on the 20th or 25th. That is, from the 21st day of the preceding month to the 20th day of the succeeding month, which is the system followed in our concern as well. The remaining days would be considered as "assumed attendance," and any leave or loss of pay will be factored into the calculation for the next month.

I hope I have cleared your doubts. If there is anything wrong, seniors, please guide me.

Regards,
B. Saravanakumar

Dear Meghana,

Monthly salary is meant for one month, i.e., whether the month has 28 days, 29 days, 30 days, or 31 days; it is common to all months. Accordingly, one day's salary is equal to the monthly salary divided by the number of days in the particular month.

As per the Payment of Wages Act, the salary is to be paid within 7 days after the completion of the month if the number of employees is below 1000. If it is above 1000, the salary date can be up to 10 days. Now, the coverage of the Act is for a monthly salary up to Rs. 10,000.

With regards,

ABBAS.P.S

Dear meghana123,

If a salary is calculated from the 26th of one month to the 25th of the next month, it would be the same as how you calculate it for a full month (1st to 30th/31st). The main reason for this is that an employee's salary for the balance days (from the 25th to the 30th/31st) would remain with the employer and be paid during the final settlement when the employee leaves or resigns. This process can be helpful in managing situations like employee absconding and attrition.

Best regards,
Mahesh

Hi,

Salaries for all purposes need to be calculated on a calendar month basis, i.e., from the 1st to the 30th/31st of the month. This synchronization aligns with the quarterly/half-yearly/annual closing of the company's accounts. If salaries are calculated between the month, for example, from the 26th to the 25th, during each accounts closing, provisions must be made for unpaid salaries (from the 26th to the end of the month) and shown as unpaid expenses in the company's Balance Sheet.

I believe no company would risk its goodwill by showing provisions for unpaid salaries. However, a company, considering its HR relations with employees and financial position, may opt to pay salaries for the current month on the 25th/26th of the month. For instance, institutions like State Bank of India pay pensions to retired employees from the 25th to the 27th of the current month, even though the pension is due on the last day of the month. This serves as an excellent example of strong HR relations.

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