How Should I Deduct Salary for Unpaid Leave: Basic or Gross? Seeking Advice

Dear Seniors,

Please let me know if an employee would like to take 15 days of leave per month without pay, how should I deduct the amount? Should the deduction be based on the basic salary or the gross salary? Additionally, if an employee takes a full month of leave without pay, what would be the correct procedure to follow? Your suggestions are greatly appreciated.

Thank you.

You can deduct the salary as per normal rules. For example, for the month of March, you can show attendance as 15 days only and calculate as per the normal calculations. Deduction will be on all the components. For example, you can deduct the full month's salary by showing the reason for leave. Usually, long leave is permitted only in case of an emergency. The company has the right to refuse leave sanction. If the company has already given leave, the employee can be shown as absent for the full month. There is no problem in showing as 0 present for the month.

Hope I have answered your query. Please reply for further assistance.

Regards, Sanjukta

Leave Without Pay (LWP) Calculation

I am presuming that the LWP—Leave Without Pay—is due to the fact that the concerned employee does not have leave in their account. Or it could be the outcome of a situation wherein their superior is not approving their leave despite them having it in their account (which may attract disciplinary action). However, in either case, it would amount to LWP.

Whether it is for company workers (blue-collar) or staff (white-collar), the deduction will always be on the gross and not on the basic salary.

For blue-collar workers, some companies pay wages on the basis of daily rates, and hence you should calculate the LWP on the basis of the total working days in that particular month/wage period (this LWP period could spread into the second month as well). White-collar staff are paid on the basis of a monthly salary, and hence you should calculate their LWP on the basis of the total number of days in that month (30, 31, or 28/29 for February).

Having said that, I have seen some companies having a different internal policy wherein the LWP is calculated on the basis of the actual number of working days in the month. So, the comments from each of the experts are correct in one way or another.

Cheers,

A.B.

Dear Sanjukta,

Thank you. Do all components refer to the gross salary? If so, then I have to deduct from the gross, not the basic. Is that correct?

Thanks again for your suggestion.

Regards,
Kamrul

Dear A.B,

Thank you for your suggestion. I have understood from you whether the deduction will be on the gross or basic salary.

Thanks again,
Kamrul Hasan