Short-Term Employment: How Do You Calculate Salary for Just a Few Days?

In case an employee joins around the 25th of January 2016 and leaves on the 31st of January 2016, when we pay their salary, do we only pay their basic and DA for 7 days? Is there a law or act regarding this?

Thank you.

Salary Payment and Payroll Cycle

Salary and its components are payable from the first day of work. Please do not segregate it.

How does your payroll cycle work? Ideally, most firms run it until the 15th or a maximum of the 21st of a month. Anyone joining beyond that date gets paid next month with the total sum of days worked.

Suppose your payroll cycle closes by the 15th of every month. Hence, an employee joining on the 25th of February might not get paid on the 1st of March. His total salary for the month of March and the 3 days of February will be credited to him on the 1st of April 2016.

Hope this answers your question. Looking forward to hearing from you!

Thank you so much for your response. I really appreciate it. I have joined a small organization a few days back, and we pay employees on the 7th of every month, but our monthly calculation is until the end of the month. In one of our employees' cases who joined on 25th Jan 2016, the amount paid to him included only basic and DA on the 7th Feb 2016, and we did not pay him for HRA and other components that were part of his salary. The system has been designed so that the employee would only receive payment for these two components for the 7 days, and the difference would be paid the following month.

Is This System Correct and Legally Sound?

The employee is disputing and asking us to pay the balance. I hope I have effectively communicated my doubt and question.

Regards

Dear Sameer,

There is no law that allows you to hold back components from the salary unless it's the Performance Based Incentive. The employee is contesting for the right reason. The balance needs to be cleared out. Do you have any accountant in the firm? Please take his advice on disbursing this.

Hi, I would like to further confirm that if an employee joins after the payroll cycle, how do we take care of their statutory compliance such as PF and ESI? Do we submit an arrear challan?

Thank you