Pay Calendar Changes - from the 1st to the 30th or 31st of each to the 25th day of each month?

Hello, I want to change my current salary payment calendar from the 1st to the 30th or 31st of each to the 25th day of each month while still maintaining the 30/31 days cycle.

How do I approach this in the first month? Do I pay from 1st to 25th in the first month which will reduce the salaries? If I pay for 30 days on 25th in the first month and someone resign without notice, I will be cheated too but if nobody resigns all absenteeism can be addressed in the next pay calendar.

I will really appreciate some advise. Thanks.

The salary period should contain 30/31 days. You can change the cycle from 26th to 25th for your convenience of computing the salary and disbursing it on 31st or 1st of the month. When you change it, for the first month, you should take the attendance of the employees from 1st of the month till 25th and pay the salary for the entire month (ie, 30 or 31 days) assuming that no one would be absent without leave. The leave taken after 25th will be considered only in the next month. If there is any LOP reported from an employee who has put his papers, hold his salary only and pay it along with F&F. There is another chance that after remaining absent from 26th to 31st, some one will take the salary for the entire 31 days and leave the company. This is also very rare. If you anticipate it, hold such an employee's salary also till he rejoins and gives valid reasons for his absence from 26th to 31st.

Hi Frances

Attendance/ leave management system is an internal matter. You may modify this, as per your convenience and organizational capabilities. However, wage payment is an enacted responsibility tied up with various norms of the government statutory agencies eg PF, ESI, LWF, Income tax, gratuity etc., which has to follow the calendar month/ year only. You may continue making "adjustments" but ultimately towards the end of the calendar year/ financial year/ exit of the employee etc you'll have to "square off" the adjustments. So take a judicious view of the situation and act accordingly.

@Madhu Thanks so much for your feedback. So if I understand you correctly, I can pay them from 1st to 25th in the first month with prorata?

@Ajay Thanks for the feedback. Really appreciate.

No, for the first month, you should pay for 30/31 days not prorata upto 25th. When you pay it 30/31 days, the risk is what I have mentioned and that is to be taken care of. But if you pay it prorata for 25 days, next month you will be paying for 26th to 25th (for one month) but the wage month cannot be the same, ie, September, but it will be Aug-Sept and this may put in trouble when you prepare your ESi and PF returns. Therefore, make it wage month wise itself like, Aug, Sept. Only thing is that for this month, ie first month, you have to pay salary on the assumption that no one will be absent without leave after 25th.