February Payroll Dilemma: Should Salaries Be Based on 28 or 30 Days?

In my company, we calculate the salary based on a 30-day cycle. My question pertains to February, which has only 28 working days. Should we calculate the salary for 28 days or for the standard 30 days? If we calculate based on 30 days, who would benefit, the employee or the employer? Is there any specific employment act that covers this situation?

Please provide clarification.

Regards,
Dilip A

In the case of February, you need to calculate the salary based on 30 days per month. If the employee is not regular, he/she will receive benefits. This means that in the case of leave, the salary deduction will be calculated as follows: Amount received = monthly salary / 30 * number of working days.

Regards,
Superna

In the month of February, the salary would be counted based on the total working days of that month. This means the salary would be calculated as:

The amount * present days / Total working days = Net Salary

For example, if the amount is Rs. 10,000/- and the present days are 25 days, then the calculation would be:

10,000 * 25 / 28 = 8,928.57

Therefore, the Salary Amount would be Rs. 8,928.57.

If you are calculating all the months with thirty days, then you have to calculate February with 30 days. If you calculate 31-day months by 31 and 30-day months by 30, then you have to calculate February with 28 days.

Regards,
Abhishek Kumar
HR & Admin Executive

This depends on company policy. You calculate the salary either on a 'calendar days' basis or on a 'fixed' days basis. From your mail, I understand that you are calculating based on fixed days. So, you have to use 30 days for February also.

The employee will benefit if there is a Loss of Pay (LOP) in February; at the same time, the employee will lose when there is an LOP in March, May, etc.

Regards,
Bala

Re: Payroll Calculation

Good morning everybody, this is a common question. In one year, there are 365 days. The method of calculation depends on the company's policy.

Regards,
Ravinder Sharma

Yes, Mr. Abhishek is totally right. If the company is not paying for 31 days (one day extra) of salary, they cannot pay or deduct 28 days (two days less) of salary.

We will calculate the 28-day salary, but the salary would be equal to 30 days. For instance, if my gross salary is 15,000, I will divide it by 28 days in February. Accordingly, we will do the same with the other months.

Regards,
Deepak Bhadauria

In this thread and in many other threads, HR professionals are venerating the "Company's Policies" as the sole authority for them. This is a significant misconception.

The Law vs. Company Policies

The law is the ultimate policy. The Company's Policies cannot supersede the provisions of the various laws by which establishments are governed. Instead, the company's policies must align with the law. Any policy that falls outside the scope of the law is invalid from the beginning.

Issue with February's Days

Now, the issue arises in treating February as having 30 days. Why was this question not raised for the other seven months: Jan, Mar, May, Jul, Aug, Oct, & Dec?

It is common sense that wages earned should correspond to the number of days in a month. Both employee and employer have the right to receive and pay an equitable amount based on the earnings in a specific month.

I fail to comprehend the rationale behind treating every month as having 30 days. By doing so, the employer only pays for 30*12=360 days, saving money equivalent to 5 man-days per person per year. This practice goes against the law.

Salary Calculation for Different Months

I am working as a payroll executive with a Pharma Company. We calculate the salary, for example, $10,000.00 per month.

In January (31 working days), the calculation would be: $10,000.00 / 31 (working days in the month) x 31 Present Days (present days + W/ff + HL + leaves) = $10,000.00 as the gross salary.

For February (28 working days), the calculation is: $10,000.00 / 28 (working days in the month) x 28 Present Days (present days + W/ff + HL + leaves) = $10,000.00 as the gross salary.

In April (30 working days), the calculation would be: $10,000.00 / 30 (working days in the month) x 30 Present Days (present days + W/ff + HL + leaves) = $10,000.00 as the gross salary.

I hope this information is useful to you.

Thank you.

Regards,
V. Sudheer
Hyderabad
[Phone Number Removed For Privacy Reasons]

Well said, Mr. Bhanot, I completely agree with you. HR professionals cannot shrug their shoulders just by saying 'it is company policy.' They are supposed to suggest and decide the HR-related policies based on prevalent law, best industry practices, sound logic, prudence, and of course, common sense. In case there are some policies not concurrent with law and sound logic, then HR professionals should make efforts to change them.

By the given logic (which is wrong), if all months are treated as 30 days, then why make an exception for February?

If the monthly salary of Mr. X is Rs. 5000, it simply means that Mr. X is getting the same Rs. 5000 for 31 days of January, 28 days of February, 30 days of April, and so on.

Just apply common sense, consider the actual days in the month, and be happy. This is the most commonly followed and right policy.

In this thread and in many other threads, HR people are worshiping the "Company's Policies" as the only gospel for them. This is a great misconception. The law is the only policy. The Company's Policies cannot override the provisions of the various laws under which the establishments govern. Rather, the company's Policies must be in conformity with the law. Any policy that is not within the purview of the law is ultra vires ab initio.

Now comes the point of treating February (in view of treating a month of 30 days). Why was this question not raised for the seven other months, i.e., Jan, Mar, May, Jul, Aug, Oct, & Dec? It is a matter of common sense that the wages earned for that many days are as much as there are in a month. The right for both employee and employer is to get and pay the equitable amount as much earned in a particular month.

I don't understand what is rational about treating every month as a month of 30 days. By doing so, the employer pays for 30*12=360 days only and saves money for 5 man-days per person per year. This is against the law.

Salary will be calculated on the following basis: Salary Rate/Month Days (28) * No. of payable days (including present days + w/o + c/l, e/l, s/l).

Regards

We calculate salary for the month irrespective of the number of days; we do not pay more salary for January, March, July, etc. Regardless of the number of days, it is calculated as 30 days in a month.

Regards,
Harish

Salary Calculation Formula for Any Month

To calculate the salary for any month, the formula should be:
= net salary * salary days / number of days in the month.

For example, if "A" receives 5000 as the net salary per month and he has worked for 14 days in the month of February, then his salary will be calculated as:
= 5000 * 14 / 28
= 2500

I hope you will now have no problem in calculating the salary.

Regards,
Hena Parween
HR Executive
Smart Identity Devices Pvt. Ltd.
Delhi

Thank you, friends, for your valuable suggestions. I'll discuss them with my management and implement them according to the working days.

Regards,
Dilip A
Hyderabad

I hope this will work for you and even for my colleagues in HR. We do follow these types of statements in XLS format and convert the same into S/W attachments.

Regards,
Pravin
HR

Salary Calculation Based on Month End Dates

Please calculate the salary for each month based on the last date of the month, such as January 31, February 28, and April 30. The company's policy does not constrain this calculation. This is a statutory activity.

Regards,
HR
Adani Gr.

When the total number of days is 28, divide by 28. When the total number of days is 31, calculate based on 31 days. In the case of 31 days, divide by 28 days only.

Regards,
Mayank

Your Salary Sheet is Flawed

- The Salary Sheet shows the salary for December 2010 with 28 working days, and you say it is for February.
- There is no DA component.
- The calculation of Basic & HRA is arbitrary.
- LTA is an intruding entity. (How can it be part of the wages and paid monthly?)
- Moreover, to make the monthly emoluments round to 25,000, you have put everything that is short of 25,000 into LTA. Just a strange thing to do.

There is no rationale between the various components of the salary. It is all Tuk-Bandi. You have tried to make 2+1/2 +1/4-3/4+??-@@@ = 4 in your way instead of doing 2+2=4. This way, you will invent a novel formula for each and every employee. There must be some basis for working out things.

I totally disapprove of this salary sheet.

To be fair to the company and its employees, if your company is a monthly paid company, i.e., including weekly off, then you should:

- Salary (i.e., basic and allowances) Divide by (Days in a month i.e., 28 or 29 or 30 or 31)
- Multiply by (present days inclusive of the weekly off)

In case it is without pay and the weekly off comes in between the unpaid days, then the weekly off is to be treated as unpaid days, i.e., prefix and suffix of the weekly off.

Regards,
Clement

The question of the day arises in the case of a daily basis payroll system. Suppose you are on a permanent basis, what grounds have you been paying salary by the company? Is it based on the number of days worked? No, therefore when calculating for permanent staff, calculate 30 days. For daily wage workers, consider days as per the Factories Act, i.e., 26 days. Alternatively, you can consider 26 days for both types of workers.

Regards,
Mitesh Pathak

How do you calculate the salary in the other months of the year, especially the months with 31 days? The standard calculation of salary is typically based on 30 days. It doesn't matter if the month has 28 days or 31 days; the calculation is always considered as 30 days.

Regards,
Aamir

Company Policy on Salary Calculation

It's purely a company policy. A full month's salary is irrespective of the number of days in a month; it could be 28, 30, or 31. If the company is paying based on the number of working days, it is purely on the basis of the number of working days only. In India, most companies adopt the first method.

Regards,
Gopi Krishna

When we pay as "Salary," it doesn't matter if the month has 28, 30, or 31 days because the salary is paid on a monthly basis, not a daily basis.

1. If any salaried employee becomes absent and you want to deduct their pay, the formula is: monthly salary/monthly calendar days × present days. If you consider monthly calendar days for calculation, fewer calendar days will be more beneficial to employees. As an HR practice, you can either consider actual calendar days or 30 days for all months.

2. When you pay as per the Minimum Wages Act, to get the daily wage rate, you have to divide the monthly wages by 26 days. Here, there is also no question of monthly days.

Thanking you with regards,

Regards,
Suresh Adav
Asst. Manager: Industrial Relations
NYK Line (I) Ltd

Don't be confused; salary is always calculated on a monthly basis, i.e., Salary rate/month days * payable days.

Regards, Pawan

Totally agreed with Pawan since we are all HR professionals. Such types of questions are certainly too basic, and they are creating confusion. Mr. Dilip, kindly refer to your February 2010 salary statement or any document that has been checked by the labor inspector during the inspection. The answer is with you.

Warm Regards,
Nikhil
Manager HR

Dear All,

Understanding Monthly Wage Calculations

What has been agreed to be paid as wages or salary under the terms of appointment is the monthly rate of wages or monthly rate of salary. Legally speaking, a month consists of thirty days. However, some months have thirty-one days, while February has 28 days, and in a leap year, it has 29 days. The number of days in a month makes no difference in computing the monthly wages payable to an employee as long as he has not availed any leave without pay or been absent for any number of days in that particular month.

The question of calculating the daily wage arises only when an employee is absent or on leave without pay for any number of days in a specific month. Therefore, in cases where the employee has been present for work on all the working days in a month, excepting the weekly holidays allowed, he is entitled to the full wages agreed to be paid under the terms of appointment, irrespective of the number of days in that month.

Supreme Court's Stance on Monthly Rated Employees

The Honourable Supreme Court of India has accepted the principle that in the case of a monthly rated worker/employee, though the month may comprise 30 days, he works for 26 days and is paid only for those days. In other words, the monthly rate agreed to be paid is for 26 days of working and not for 30/31/29/28 days of working. The Honourable Supreme Court has stated that in the case of a monthly rated employee, his daily wage should be arrived at by dividing the monthly rate by 26 and not by the number of days in the month. I believe this clarifies the issues raised in this thread.

With regards,