How Should We Calculate Salary Days in a Month with Holidays and Leave?

We are a start-up IT firm in Gujarat. We are framing our HR policies when one question came up: what is the basis for calculating the number of days attended? I read somewhere that we should calculate the salary based on 26/30 days, irrespective of the month. But in that case, please clarify the following scenario:

Month - July 2014

- 4 Sundays + 1 Holiday (Eid)
- Person X took 1 LWP

If we take 30 as the base:

- Days worked = 25
- Weekly Off = 4
- Holiday = 1
- LWP = 1
- Total = 31 days

So how do we calculate based on 30 days? Or do we keep varying it between 30-31 based on the month? But then the salary per day will keep varying.

Awaiting your valuable inputs.

Please find the correct format for calculating salary below:

Salary Calculation Formula

Salary calculation = Salary / Month days * Paid days

For example, if A's salary is 5000, then:
5000 / 31 = 161.290 (One day's salary)
161.290 * 31 = 5000

Thank you.

Dear Mrugen Vyas,

From your calculation, I understand that we vary the number of days as per the month. For July, the salary per day would be 322.58, for September, it would be 333.33, and for February, it would be 357.14. Is that correct? Does the salary per day keep changing?

I am not sure how it is implemented in India, but in Malaysia, we usually go by this formula: (Basic salary / No. of calendar days in the month) x no. of actual days worked in the month to derive the basic salary.

The same formula would also apply for unpaid leave calculation where you will replace the number of actual days worked with the number of days of unpaid leave. All HRIS will have this formula built into the system as a standard practice. This is the formula according to the labor laws here. Some companies practice 26 days, etc., but that will be more for overtime, not basic salary or leave.

Typically, if you apply the above formula, you should not have to change the formula every month. The software should take care of it automatically.

Hope that helps.

Regards, Venkat Kuala Lumpur, Malaysia

Mr. Vyas has aptly answered your query. If you take 30 days as the base, then the salary per day will increase or decrease based on the number of days in that particular month. Alternatively, if you do not use the base of 30 days, you can go with the actual days of the month if you want the per day salary to remain the same. You have a choice.

Salary Calculation Basis

Salary is normally calculated per month and not per day, as is the case with daily wage earners. Therefore, any calculations have to be made based on the number of days in the month and the number of days for which the salary is to be paid.

The salary per day will vary from month to month. For this, you have to consider the calendar month basis and the number of days in that month. You have to take into account paid holidays, paid weekly holidays, leave without pay, unauthorized absences, etc. Now I will explain it to you as follows.

Example Calculation

Mr. A's salary per month is Rs. 7500.00. The salary is payable for the month of July 2014. He has worked for 25 days and assume 1 day is a leave without pay. July has 4 Sundays and 1 holiday. Now, the calculation is Rs. 7500 divided by 31 and multiplied by the number of days of salary payable (with pay). His salary for the month of July 2014 payable is Rs. 7258.00. Although our friends have given their opinions, it is explained with an example.

I hope that it is clear to you.

Regards,
Adoni Suguresh Sr. Executive (Pers, Admin & Ind. Rels) Retired Labour Laws Consultant