Salary Calculation Confusion: How Do You Handle Discrepancies in Offer Letters?

Salary Calculation Discrepancy

I have a query regarding salary calculation. Let's consider an employee's Basic salary as 336,980/- per year based on the Fixed Pay calculation. If we calculate this on a monthly basis (336,980/12 = 28,081.67/- per month) and then convert it back to a yearly figure by rounding the values (28,082*12=336,984/-), a discrepancy arises in the final amount. Both the monthly and yearly components are mentioned in the Offer Letter, leading to potential questions from employees due to the difference in the calculated amounts.

I would appreciate any assistance in resolving this issue.

Thank you.

Hi Mr. Sathya,

The difference between the amounts is a mere four rupees. If your employees raise this as an issue, then tell them the exact reason for the difference. I hope the employees will understand this.

With Regards,

Mr. Thumbs Up

Hi, Sathya,

I believe rather than calculating employees' basic salary on a yearly basis, you should opt for monthly remuneration and then calculate it yearly. If the monthly salary is in decimal figures, round it off and post it. You may proceed with the calculation accordingly.

Best wishes!!!

@Kumaran: We shall explain, but our management doesn't want to answer for each and every employee if they raise this issue. We are looking for a permanent solution.

@Meena, Post rounding off the monthly value, if we calculate it for a yearly basis, then also the problem occurs.

Thanks,
Sathya A N

Fixation of basic salary and other components connected is normally calculated and payable on a monthly basis. The concept of fixing the salary per year is somehow not clear to me. If you could please elaborate on the purpose behind this, we may be able to guide you.

Adoni Suguresh
Labour Laws Consultant

Dear Sir,

There is no specific rule for the fixation of the basic salary, but it is generally assumed that the basic salary should be 50%-60% of the gross salary, not less than the prescribed minimum wages of the state. HRA should be 40%-50% of the gross salary, and conveyance allowance should be Rs 1600 (exempted from income tax). The remaining amount should be allocated to other allowances.

Thank you & Regards,

Sumit Kumar Saxena

I do not think an employee receiving a Basic Pay of Rs. 28,082 per month will fail to understand the calculation of rounding up fractions or mind receiving an extra Rs. 4 in a year. In fact, if such an employee wastes his own and the company's time, as well as that of others, by asking for details and justification for Rs. 4, then one can safely conclude that a mistake has been made in hiring such a person at such a high salary.

Hiring Process Inquiry

The only question that I am curious to know the answer to is, how do you hire such employees? Is it solely based on references or orders from your seniors, or do you have a recruitment system in place?

Please forgive me if you find the above not very pleasant. I believe that none of the team members appreciate having their time and efforts wasted on such trivial, irrelevant, and inconsequential matters. For your information, even the law does not consider trifles or trifling issues! This is an established legal philosophy.

If you doubt my words, please try to file an FIR stating that someone has robbed you of Rs. 4 or that you have lost Rs. 4. See if any legal action is taken on this matter. In all fairness to you, and giving you the benefit of the doubt, it appears that your seniors or colleagues may be attempting to deceive you. It's akin to elders telling a child, "That crow has taken your ears!" just to watch the child chase after the crow!

Thank you.

Dear Sathya AN,

Salary is fixed on a per annum basis in the appointment letter. Therefore, pay him rounding off the figure every month for 11 months. In the 12th month, you pay him the gross pay as per the appointment letter, minimum total of what you have paid for 11 months. Trust this will solve your predicament.

Yess... This seems to be the perfect solution.

Instead of dividing the annual amount by 12, pay him a rounded figure every month for 11 months; then in the 12th month, pay him the remaining amount.

Hope that solves your problem satisfactorily.