Navigating Salary Payments: How Do You Handle Month-End Closings and New Joins?

Dear Fraternity,

I have a few queries regarding month-end closing by the 25th and paying salaries by the 1st of every month. I would like to understand how the following scenarios are dealt with:

1. If an employee joins after the 25th, how are their PF and ESI contributions paid for the month?

2. If someone joins on the 1st day of the month, will he/she be paid a full month's salary for 25 days only?

3. Likewise, if someone leaves after the 25th (assuming they have been paid for the full month), how is the excess salary treated?

4. Considering month days variations of 28/30/31 (e.g., if you are paying salary for the month of March and there was actual attendance for 3 days in February and 25 days in March, totaling 28 days), in this case, is it paid for the full 31 days?

I would appreciate responses from members who are actively involved in the salary administration model.

Warm Regards

Dear User,

Your queries regarding the salary administration model are pertinent and require a detailed understanding of Indian labor laws and HR policies. Here are the responses to your scenarios:

1. If an employee joins after the 25th of a month, their Provident Fund (PF) and Employees' State Insurance (ESI) contributions would be calculated for the actual number of days they have worked in that month. This is then paid in the following month. Generally, these contributions are calculated based on the pro-rata salary for the specific period the employee has worked.

2. If someone joined on the 1st day of the month, the salary would typically be paid for the entire month, assuming they've worked full-time. However, if your company follows a practice of closing the month on the 25th, then the employee will get the salary for 25 days in the first month.

3. If an employee leaves after the 25th and has already been paid for the full month, the excess salary is usually recovered from the final settlement. This includes any outstanding dues, loans, or advances.

4. Regarding variations in monthly days (28/30/31), the salary is generally calculated based on the actual number of working days. If the attendance is for 3 days in February and 25 days in March, then the pay would be for these 28 days only, not for the full 31 days of March.

For all these scenarios, it's essential to follow your organization's policy and the labor laws in your location. If there are any discrepancies or unique situations, it's always best to consult with your HR or legal team.

Remember, each organization may have its own policies and systems in place for salary administration, so there could be variations in how these scenarios are handled. Always refer to your specific company's policies for the most accurate information.

Hope this helps! Please reach out if you have further questions. 🤗