Insights on Pay Calculation, Salary Structure, and Compensation Adjustments Based on Working Days

Dear sir, Please advise me. Our factory has maintained the muster roll for monthly workers. We have to pay all workers on a monthly basis. My question is if a worker only works for 24 days in the month of Feb-14, do we still have to pay the full monthly salary? If a worker is absent on a working day, we only deduct the Loss of Pay (LOP). For months with 27 working days, we pay the full monthly salary. If there are LOP days, we reduce the salary accordingly. This is how we handle the muster roll.

Is This Approach Correct?

For instance, in Feb-14, if a worker works for 24 days, should we pay the full monthly salary of 5000/-? Similarly, in a 25-day month like June-13, if a worker is absent for one day, resulting in 24 working days, should we pay 4808/-? In Dec-13, with 27 working days, if a worker is absent for one day, resulting in 26 working days, should we pay 4808/-?

Note: Sundays are considered holidays with loss of pay, divided by 26 for the gross salary.

Regards, kos

Attribution: https://www.citehr.com/member.php?u=...#ixzz2wTtRXO8k

I could not understand your query. Please elaborate. As far as I understood from your query, you have to pay the salary for the full month even if the working days are 24 instead of 26. If an employee is absent for a day or two, the same has to be adjusted against their leaves or Loss of Pay (LOP).

Thank you for your valuable reply. I am joining a new textile manufacturing company. They have the following pay calculation structure. Please clarify my payroll doubts outlined below.

Factory Staff Salary Structure

Our factory staff salary structure is as follows: basic - 5000, DA - 2500, HRA - 2500, gross salary - 10000, and worker salary per month is 3718.

Salary Calculation Examples

- If the working days are 27 (December), the salary is Rs. 10000. If there is any Loss of Pay (LOP) for 1 day, the deduction amount would be 10000/26*1 = 384.61, resulting in a net salary of 9615.39.
- If the working days are 25 (June), the salary is Rs. 10000. If there is any LOP for 1 day, the deduction amount would be 10000/26*1 = 384.61, resulting in a net salary of 9615.39.
- If the working days are 24 (February), the salary is Rs. 10000. If there is any LOP for 1 day, the deduction amount would be 10000/26*1 = 384.61, resulting in a net salary of 9615.39.

Worker Wages Calculation

- If the working days are 27 (December), the wage is Rs. 3718. If there is any LOP for 1 day, the deduction amount would be 3718/26*1 = 143, resulting in a net wage of 3575.
- If the working days are 25 (June), the wage is Rs. 3718. If there is any LOP for 1 day, the deduction amount would be 3718/26*1 = 143, resulting in a net wage of 3575.
- If the working days are 24 (February), the wage is Rs. 3718. If there is any LOP for 1 day, the deduction amount would be 3718/26*1 = 143, resulting in a net wage of 3575.

All calculations should be based on 26 days. When calculating the salary using the LOP method, it may not meet the minimum wages for the worker even if they work for 27 days.

Query on Extra Day Payment

My question is, if the working days are 27 in a month, do we have to issue the salary for one extra day? For example, 10000/26 = 27 * 10000/26 = 10384.61. Is the above format correct? Please advise.

Thank you.

Understanding Salary Deductions for Monthly Workers

If you are asking for 1 day extra for 27 days of working in a month, then the employer would also consider deducting 1 day, assuming working for 25 days or 24 days in a month. This decision may impact every employee.

Regards

Yes, that's right. The employer has deducted one day for 27 days of work in a month from each and every employee. Is this the correct pay method for that company? Kindly reply.

Regards,
Kos

Understanding the Factories' Act on Worker Compensation

The Factories' Act is very clear on this subject. You have to give one day off after every six working days. What you need to do is pay the workers based on the number of working days in the month.

For example, in February 2014, there were 28 days, out of which four were Sundays (assuming your factory is closed on Sundays). Therefore, your calculation would be:

For Feb 14: Rs. 5000 (Basic + DA + HRA + Other Allowances) / 24 (number of working days in the month) x Number of days present, less deductions for PF, ESI, etc.

For Mar 14: Rs. 5000 / 25 + 1 (Paid Holiday for Holi) = 26 x Number of days present, less deductions...

Dear Saji,

Yes, I agree that the management has paid for an extra 1 and 2 days' wages even for 25 and 24 working days. What I meant was, if there are 27 working days in a year - 5 months, 25 working days in a year - 2 months, 24 working days in a year - 1 month, 26 working days in a year - 4 months.

27 Days - 5 months, so, 5 working days extra for a whole year. The auditor has discussed this point of view. If the worker has worked in a year, they have worked for 5 extra days. However, the management has only paid for 4 extra days' salary like this month, 24 and 25 days in a month. What about that 1 Day Salary?

What I feel is that if the worker works for 27 days, we should pay for the extra one-day salary. Please provide a solution.

Regards,
kos