Salary Calculation Dilemma: Should We Base It on 26 or 31 Days? How Do You Decide?

The employees' monthly salary is calculated based on either 26 or 31 days. This is because there are typically 26 working days in a month, but months can have up to 31 days. How should the salary be calculated in this scenario?

It depends from company to company, is all that I would like to suggest. However, as per the laws, there should be 1 rest day after a maximum of 6 days of work in a week. So by default, Sunday becomes a paid holiday.

Most companies practice a 30-day process irrespective of the months having 31 or 28/29 days. Many companies take the number of days in the month like 31 for Jan, 28/29 for Feb, 31 for March, 30 for April, and so on.

30-Days Feature

You do not have to change the formula every month depending on the number of days in the month. The salary per day for any month would be the same, and hence calculation becomes easy.

Monthly Days Feature

Though the number of days in a month changes from month to month, and hence salary per day changes month on month. Salary per day for the month of Feb is the highest as it has the lowest number of days in the month. Salary per day for the rest of the months has minor changes because of 30/31 days.

The best part is that you tell your employees that all the Sundays and the holidays are paid ones.

I hope this was able to clear you and give you better ideas on which approach to consider.

All the best.

For calculating salary, we must consider 30 days irrespective of any month. We consider 26 days for Gratuity and Leave Encashment calculation.

For Gratuity:
[(Basic Pay + D.A) x 15 days x No. of years of service] / 26

For Leave Encashment:
Basic Salary per month * Number of Earned Leaves left / 26

Instead of using 30 days for all months, it is better to calculate using 30.44 days. The calculation is as follows:

Calculation Method

- Days in a year: 365 x 3 years
- Days in a leap year: 366
- Total days in 4 years = 1098

Calculation: 1098 (days) / 4 (years) / 12 (months) = 30.44

Regards,
M. Suresh

IT should be considered as per months and days like January - 31, February - 28/29, April - 30. These days include weekly off. In the case of absence or LOP, reduce the number of days.

Thanks & Regards,
Shashidhara.GK
HR Manager

Please note that there are two types of employees:

Monthly Rated Employees

- All administrative staff, managers, office staff, etc., are classified as monthly rated. They receive their salary for a particular calendar month. Regardless of the number of days in the month, there is no salary variation. Even if there are 4 or 5 weekly offs, they are paid for all weekly off days.

Daily Rated Employees

- All wage earners, particularly classified under the Workman/Worker category, are paid on a daily wage basis. The monthly salary/wages offered are divided by 26 days throughout the year, and the formula remains constant. The same formula is applied even for February.

The salary/wages of these employees are generally linked to The Minimum Wages Act - 1948, and the minimum wages declared by the Government are calculated by dividing by 26 days. When determining the Minimum Wages, the Government also takes into account payment for Weekly Off days. Although the payment is calculated for 26 days, the weekly off days are always considered.

Thank you.

Day of Rest and Salary Calculation

The act states that after 6 working days, a day of rest should be given to our employees. Since the act does not mention anything about wages/salary for the day of rest, the management may kindly provide their employees with a day of rest and pay salary for 26 working days.

The above logic is correct because gratuity and leave encashment have been calculated and paid to employees by treating 26 as a normal working day per month as working days.

Regards,
Raju

What Mr. PN Pathak mentioned above is the correct scenario. When computing wages, you are required to calculate for 26 days only, not for 30 days. For instance, if you require a person to work all days except Sundays, the wages will be for 26 days—minimum wages must be complied with.

In another scenario, where all 30 days of work are required, a reliever must be arranged for that person. This concept is generally applied in outsourcing cases. The calculations can be made either on a mandays basis or a man-month basis.

Regards.

Leave Encashment Calculation

As per your suggestion for leave encashment:

- Basic Salary per month * Number of Earned Leaves left / 26

However, I believe the following calculation might be more accurate:

- ((Basic salary * 12 months) / 365 days) * Number of Earned Leaves left

Thank you.

Salary should be considered on a monthly basis, accounting for the varying number of days in each month, like January - 31, February - 28/29, April - 30, May - 31. These days include weekends as well.

Example Calculation

For example, May has 31 days.

- Working Days = 27 Days
- Weekly Off = 4 Days
- Total Paid Days = 31 Days

Salary will be calculated separately for each component. For instance:

- Basic/31 * Total Paid Days

Handling Absence or Leave Without Pay (LWP)

In case of absence or Leave Without Pay (LWP), the number of days should be deducted from the working days. For example:

- Working Days = 25 Days
- Weekly Off = 4 Days
- CL = 1 (approved leave)
- SL = 1 (approved leave)
- Total Paid Days = 31 Days

I hope this clarifies the calculation method.

Thanks,

Vandita Sawhney
Head HR

To get the exact calculation, you should go with 28/30/31, i.e., actual days. However, most companies follow 30 days a month. I would suggest either choosing the exact days or working days, i.e., 26 days because 30 days include holidays. The maximum salary for a year is 30*12=360 days. What about the 5 remaining days in a year?

Regards,
Jithu

Salary Calculation Based on 26 Days

Considering a monthly salary as 26 days' salary is okay. However, reciprocally, the same logic should be applied to calculate the salary for leaves, holidays with wages, or earned leave surrender, etc.

Regards,
[Name Removed For Privacy Reasons]
[Phone Number Removed For Privacy Reasons]

As per the above comments/reply: If we have to pay as per the rate of minimum wages and it is calculated at 26 days, then when in any month 31 days come with 4 Sundays, should we pay Rs...... (Minimum wage rate per day) X 26 days or Rs...... (Minimum wage rate per day) X 27 days. Pls. confirm.

Note: My query is purely in the case of daily wages for workmen (contractual).

Hello,

I have a query related to salary calculation. One of our employees has gone on leave in the middle of the month and will return next month (taken leave from 18th January to 5th February). We follow a uniform month policy, i.e., a 30-day policy. During the leave period, two Sundays are also included. I am a little bit confused about salary calculation. Should we pay for both Sundays? Please help me clear up this confusion.