I have gone through this pitched battle of views on the issue of whether a month shall be construed as 28 days, 30 days, or 31 days. Thanks to Ms. Ghr for kicking off an intense debate on a seemingly simple but truly intriguing issue. No doubt, as a member correctly said, nobody has put forward their views based on assumptions, but only on the practice followed in their respective companies. Nobody has, however, provided any legal basis in support of their views. Following different yardsticks for a month to arrive at a day's wage has its own merits and demerits, especially when wages are to be deducted for absence or loss of pay since every penny, as Mr. Shenbagarajan said, matters to an employee.
For example, the employer will be deducting more wages for loss of pay in February but a lesser amount in April, and even less in May since the calculation of a day's wages varies according to the number of days in a month. This, in my view, may not be a prudent method, particularly as it may create a more anomalous situation in complying with legal requirements like calculating retrenchment compensation.
Legal Framework for Retrenchment Compensation
Section 25-F of the Industrial Disputes Act provides for the calculation of retrenchment compensation at 15 days' wages for each completed year of service. There were divergent methods adopted by employers to calculate the compensation. Some followed 26 days, while others followed 30 days, and yet others followed the number of days in the month in which the employee was retrenched. This gave rise to different figures as compensation. This lack of uniform practice led to industrial disputes on how a month is to be construed for the purpose of arriving at 15 days' wages. Setting to rest the conflicting views on the issue, the Supreme Court in Guru Jambeshwar University through Registrar V. Dharam Pal 2007 I LLJ 1006, has laid down that the compensation has to be calculated on the basis of one month, meaning 30 days but not 26 days. This method can be adopted to bring uniformity and also as a salary for a month is constant and does not vary with the number of days in a month, so also the divider shall be constant for arithmetical accuracy. The formula of 26 days as adopted in the Gratuity Act cannot be made applicable here since the Gratuity Act has specifically prescribed it for calculating gratuity only, being a retiral benefit but not for every kind of benefit.
Regards,
B. Saikumar
HR & Labour Law Advisor
Mumbai