Is It Legal to Pay Salaries from the 20th to the 21st and Delay Payment Until the 5th?

Salary Calculation and Payment Timing

Is it legal to calculate salary from the 20th of one month to the 21st of the next month and pay it on the 5th of the following month? For example, if the salary is calculated from December 20th to January 21st, it is paid on the 5th of February. I believe this practice is implemented to discourage employees from leaving the company immediately after receiving their salary.

Kindly advise on this matter.

Regards,
Deepika

The wage period can be fixed on any day during the month; it could be from the 1st to the 30th, or the 26th to the 25th, or the 15th to the 14th. However, the disbursement of salary has a clause:

1. If there are fewer than 1000 employees, the salary disbursement should be on or before the 7th day from the expiry of the wage period.
2. If there are 1000 or more employees, the salary disbursement should be on or before the 10th day from the expiry of the wage period.

You can refer to the Payment of Wages Act, Section 5, for reference.

Discussion on Salary Payment Periods

This matter has been discussed many times on CiteHR. Do a search on the matter, and you will find the relevant threads.

Christopher, the Payment of Wages Act, Factories Act, and other regulations specifically provide for the payment of salary on a calendar month (or less period). You cannot decide your own dates for the wage period. Many companies do pay salary based on attendance up to the 26th (or even 20th), but they do so assuming the employee will be present on all the remaining days. Where there is an absence for a subsequent period, they then adjust those days in the next month.