How Do You Calculate Wages When Working Days Vary Each Month? Seeking Examples!

Dear All, I am from Hyderabad and work for a polymers company in HR. Can anybody please help with how wages will be calculated?

Current Wage Calculation Method

Currently, we calculate as follows: The minimum wage is 9500/26 (excluding Sundays and public holidays). If in a particular month the working days are only 24, 25, or 27, how should the calculation be made? Can anybody please explain with an example?

Thank you.

Understanding Salary and Wages

We need to understand that salary is paid on a monthly basis to staff and other employees, consisting of 30 days. Wages are paid to workers on a daily rate basis, which is calculated by dividing gross wages by 26, regardless of Sundays and holidays in a month.

Daily Rate Calculation

The daily rate is to be computed by dividing the monthly minimum wage by 26, irrespective of how many actual working days there are. This is stated at the end of the minimum wage notification (check the notification for your state).

The idea behind this computation is to automatically pay for the weekly off by increasing the daily rate to pro-rate for the weekly off. This method has been supported by the courts as well, so you should not encounter any problems.

The only difference it actually makes is in the computation of leave without pay for those who have not worked for the full month.

The minimum wage is 9500 for 26 days of work (excluding Sundays and public holidays) and shall remain the same for working 24, 25, 26, or 27 days.

Thank you for your valuable replies. I understand that minimum wages have to be computed based on 26 days. However, in a month where only 24 working days are present, we should divide the amount by 26 and pay for the full month. If not, the employee will receive less salary for the 24 days' calculation. I need clarification on how this calculation should be carried out. Are there any specific terms defined for this scenario? If yes, could somebody please explain with examples?

Regards, Hanumanth

Calculating Daily Wages for Different Working Days

Monthly minimum wages divided by 26, we arrive at the daily rate of wages as per the act. Now, the question is: for any daily-rated employee working for 24/25/27 days in different months, what will be their actual payment?

It will be multiplied by the daily rate by the number of working days.

S K Bandyopadhyay (WB, Howrah)
CEO - USD HR Solutions

For an employee who is receiving 9500 for 26 days, will he get the same for 24 working days as well? If he is receiving less, will an employee accept it? Experts, please advise.

Regards,
Hanumantha Rao

You divide the minimum rate of wages by 26 days as a standard to only arrive at the daily 'rate' of wages. What each worker will actually get paid will vary with the number of working days in a given month as well as the days he actually worked and was on authorized leave. In this situation, in some months, the actual wages paid will be less than the standard rate of wages calculated for 26 days, which is quite alright and legal. The confusion arises when it is assumed that the standard daily rate is to be applied for 26 days every month irrespective of the fewer number of working days.

Regards, Vinayak Nagarkar
HR and Employee Relations Consultant

Thank you, Mr. Vinayak Nagarkar, for the proper clarification. I would like to add the following points for further clarification:

1. The wage rate may be hourly, daily, or monthly.

2. If the wage rate is daily, the monthly minimum wages should be divided by 26 and then multiplied by the actual number of days worked during the month for payment.

3. If the wage rate is hourly, the monthly minimum wages should be divided by (26 x 8 = 208). Payment has to be calculated based on the actual hours worked in the month at the hourly rate.

4. If the wage rate is monthly, regardless of the number of days in a month, the monthly minimum wages should be paid.

S K Bandyopadhyay (WB, Howrah) CEO - USD HR Solutions

You can continue to divide by 26, but based on working days, the salary will be processed for one month or less.

Regards, Shridhar

If the minimum wage has to be divided by 26 and paid to workmen depending on the number of days they worked in the factory, we have declared a paid holiday for the factory. Does this have to be paid to contract workmen?

Regards,
Hanu

Paid Holidays and Wage Calculation

A declared paid holiday applies to all workers as the Factories Act does not distinguish between own, contract, permanent, or temporary workers. Neither does the Payment of Wages Act. A paid holiday is considered as a day worked, provided it was not on a weekly off.