Payroll Dilemma: How to Handle the First Month's Salary with New Attendance Cycle?

Can anybody help me please with the below problem.

Current Payroll Process

As of now, we are processing the payroll from the 1st to the 30th or 31st of every month and paying salaries by the 10th. I would like to suggest to the company to pay salaries by the 1st of every month by calculating attendance from the 26th to the 25th.

Issue with First Month's Payroll

I have a problem in the first month where I need to process salaries from the 1st to the 25th, that is for 25 days only. How should I consider the remaining 5 days in this month, and will there be any problem in statutory procedures?

Thanks & Regards,
L. Dayakar Reddy

Salary Payment and Attendance Cutoff

In the first month, you can pay the salary in full by considering the attendance of the first 25 days as the cutoff date until the 25th. From the next month onwards, you can set the cutoff from the 26th to the 25th. However, it is essential to note that no employee should perceive that you are paying a salary for only 25 days. Another crucial point is that a robust attendance tracking system should be maintained for each employee.

In this scenario, you can consider the cut-off date as the 25th of the month, and the remaining 5 or 6 days can be marked as present for all employees. During the salary processing of the next month, you can adjust any absenteeism (keep records so that you can explain the same to employees when they approach you). I follow the same method; this way, you pay the employee for the entire month, and the salary disbursement is done by the 30th, 31st, or latest by the 1st of the month. In case of absenteeism or leave without pay, the same is adjusted in the next month. So, it's a win-win situation for all.

Note: In case an employee leaves the company, the same can be adjusted from his/her full and final settlement.

The first month of the year, we will take 26 days, and after that, we will continue the month with 25 to 26 days. Following this pattern for all eleven months, the last, the 12th month, we will again calculate the full month. Throughout the year, we will check for 5 or 6 days as present or leave. If there are any absences, those will be counted in the following month.

Thanks

I am also following the same process, and I am sure this is a good practice. You just need to count the working days from the 1st to the 25th of the current month but provide the salary from the 1st to the 30th. Any deductions for the 26th to the 30th should be taken into account in the next month. If any employee has been left out, then adjust the amount from the full and final settlement.

The first month, i.e., January, you can take from the 1st to the 25th, but the salary account considers 30 days, from the 25th to the 30th. If anyone takes leave, it will be adjusted the following month. You should continue this pattern for the next months. In December, take the full month, from the 1st to the 30th, for everything to align correctly.