Regarding The Loss Of Pay Calculation

Dear All,
Greetings for the day!!!!
I have few doubts regarding the calculation of salary with “Loss of Pay”.
1. The LOP should be deducted from the Basic Pay / Gross pay / (Gross pay + Liabilities) ?
2. The PF and ESI will be paid for entire month / exact number of days worked?
Can any one clarify me the calculations part with an example of 2days LOP for the month of November (30 Workind days).
Thank you.

Hi,
The Loss of Pay should calculate from gross salary after that you can start the deductions, like esic, pf, pt, TDs

Hi,
As per Minimum Wages Act, to arrive at daily rates of wages, the monthly wages shall be divided by 26 and to arrive at monthly rates of wages, the daily rate of wages shall be multiplied by 30, irrespective of number of days in a month.
Illustration:
Let salary of X be Rs.5,200.00 (salary components are basic and DA only) per month.
Now,
Fixed Salary : Rs.5,200.00
LoP : 2 Days
LoP Salary : Rs. 400.00 (Rs.5200.00/26 * 2)
Eligible Salary : Rs.4,800.00 (Rs.5200.00 - Rs.400.00)
Less - EPF : Rs. 576.00 (Rs.4800.00 * 12%; NCP Days will be 2 Days)
Less - ESI : Rs. 84.00 (Rs.4800.00 * 1.75%; Worked Days will be 30 - 4 Sundays - 2 LoP = 24 Days)
Now you may apply the above in your case.
Any may please correct me if I am wrong.....

]Dear All,

Greetings for the day!!!!

I have few doubts regarding the calculation of salary with “Loss of Pay”.

1. The LOP should be deducted from the Basic Pay / Gross pay / (Gross pay + Liabilities) ?

2. The PF and ESI will be paid for entire month / exact number of days worked?

Can any one clarify me the calculations part with an example of 2days LOP for the month of November (30 Workind days).

Thank you.[/QUOTE]

Dear Srinath,

Replying to your 1st query- LoP is deducted from the gross pay only (which excludes any incentives or bonus)

2nd query- In case, if one 1-2 LoP's the EPF is paid for the whole month but if they are more (10-15) then PF can be deducted like very aptly elaborated by Mr. Mohan.

Technically PF gets deducted but it would usually not make a difference till the basic is below INR 6500/-. If the basic is below mentioned amount then you can deduct the PF day wise.

For ESIC, I am not very sure. You can go to ESIC website & when you fill the form there just fill in the required columns. The form will calculate all things itself. All you need to do is fetch data. As per that, I am not sure if anything is deducted for LoP's.

But I am very certain that holidays & Sunday's are not deducted netither from ESIC nor EPF.

Example-

CTC- 1.8 lpa

Monthly- 15000/-pm

No. of Working days (Say,November)- 30days

LoP- 2

Hence, paid days- 30-2= 28

EPF- 12% of Basic {MIN(6500,Basic)} (Deduction not required usually)

ESIC- It's self calculating if you go into your ESIC account.

Wishes,

Axita

If to arrive at 1 day's LOP salary,monthly salary is divided by 26 the same logic should be applied for calculating 1 day salary for;
a.Leave encashment
b.Retrenchment
c.Lay off
d.Closure
e.VRS etc,
As per General Clauses Act one month means 30 days It is better to follow it unless otherwise specified in relevant statutes;like POG Act.
Varghese Mathew
9961266966

Dear Axita,

I am of the view that Sundays and declared holidays shall not be taken into account as working days in the case of ESI. Because, if one work on those day(s), he/she would get double wages for that day over and above the salary fixed for a month.

Let us assume that a month of 30 calender days contains 4 Sundays and one is drawing a salary of Rs.5,200.00 per month. If he/she doesn't work on any Sundays and have no loss of pay, his/her salary will be Rs.5,200.00. If he/she work on any one Sunday, he/she will get Rs.400.00 as salary for that day along with the fixed salary of Rs.5,200.00. Now he/she would have worked for 27 (30-4+1) days and hence for ESI, number of days worked will be 27.

So, applying the above logic in the case of Mr.Srinath Manam, the salary on which ESI payable will be Rs.4,800.00 (Rs.5,200.00 - Rs.5,200.00/26*2) and the number of days worked will be 24 (30-4-2) days.

Please note that payable wages and number of days worked are to be given as inputs while making returns online.