Is Deducting Loss of Pay from Gross Salary the Right Approach for Our Charity?

Ours is a charitable organization. Salaries are being calculated on a monthly basis. If any staff applies for leave beyond their leave credit, loss of pay is calculated on the gross salary and deducted from the salary. This means the salary is prepared for 30 days (PF & ESI deducted for 30 days) and in the deduction column, the loss of pay amount is deducted.

Is this the correct way of calculating salary? Kindly guide me in this regard, and if any rules are available, please attach the same.

Your employee, are they working for 30 days or 26 days? If working for 26 days, then in my opinion, one day's wage for unauthorized absence/loss of pay deduction would be gross wages divided by 26 and multiplied for the number of days to be deducted!

Hi Vijaykumar,

You need to calculate LOP based on days. If a person takes LOP leave, you can deduct one day before the salary preparation days. (30 - 1 = 29)

In a simple method, the accurate calculation is as follows:

Suppose Anil has taken 3 days of excess leave in March, and you wish to deduct the same. The formula is as follows: (March days 31 - 3 days LOP = 28 days salary payable). Anil's salary is Rs.15,500 per month.

Calculation: 15500 x 28 / 31 = 14000 gross salary payable. Deductions include PF at 12% = 1680, ESI at 1.75% = 245, and PT at 200, totaling 2125. Therefore, the net salary payable is 14000 - 2125 = 11875.

Hope this explanation is clear to you.

Suresh

What are the components of 'Gross Salary'? In public service, fixed allowances such as HRA, Transport Allowance, etc., are not taken into account while calculating Leave without Pay. Of course, there are specified norms for the grant of such allowances in the case of continuous absence.

Hello friends,

In this case, there is no need to worry. If the employee is on a contractual basis, then only 26 days are taken into consideration for payroll, and for permanent employees, 30 days are considered. Calculate the salary based on the gross salary (suppose 'x' is the salary, then divide by 30 and multiply by the number of days present. PF/PT will be deducted from this calculated amount.

The correct method is to calculate as follows:
( frac{X}{30} times text{number of days present} ).

It is the correct method; there is no rule. It is standard practice.