Understanding the 21st to 21st Pay Cycle: How Are Salaries Calculated for New Joiners?

What does it mean by 21st to 21st pay cycle? How is the salary calculated here, especially for new joiners who join before the 21st of a particular month?

Salary Calculation for New Joiners

Salary is calculated on a prorated basis in the first month for new joiners and then included in the pay cycle. The pay cycle is the duration within which the salary is calculated. In your firm, it is calculated between the 21st of a month to the 21st of the next month.

Ideally, the calculation is either between the 21st of Month X to the 20th of Month Y. But that's entirely for the HR and the payroll team's reference.

Regards

In different organizations, the pay cycle varies. Some companies consider it from the 16th of the previous month to the 15th of the current month, while others use from the 21st to the 20th (as in your case). There are also those who calculate it from the 1st to the last day of the month. In the last scenario, there are no issues. However, in the previous cases, the employee is assumed to be present for the next 15/16 or 10/11 days based on the pay cycle system. In the event of any leave without pay (LWP), the period is adjusted when computing the salary for the following month. For instance, for the month of May, absenteeism will be counted from the 16th of April/21st of April to the 15th of May/20th of May, as the case may be. If an employee takes LWP, the days of absence will be deducted from the salary for the next month.

I hope this explanation clarifies things for you.

Regards,
Arun Jain
HR Personnel
NCL, Coal India Ltd.

Our company follows a 21/20 pay cycle, and here are two instances—one for me and one for my team member.

1. I took Leave Without Pay (LOP) during June 2012 between the 18th and 22nd. For this duration, LOP for the 18th, 19th, and 20th was deducted in June 2012, and the 21st and 22nd were deducted in July 2012.

2. My team member went on Maternity Leave (ML) from March 2012 and extended her leave through LOP until June 2012. She joined on July 1, 2012. Her salary for July 2012 was paid until the 20th, and for August, it was for the full period from July 21st to August 20th.

Regards,
Sathish