Salary Calculation Dilemma: How to Handle Long Absences and Loss of Pay?

My company processes salary for all employees from the 26th of the previous month to the 25th of the current month. For example, in August, the 26th to the 31st equals 6 days, and September 1st to the 25th equals 25 days, totaling 31 days. However, the salary should be calculated only for 30 days for the month of September.

Case 1: Employee absent from 26th August to 31st August

One employee did not attend the company from 26th August to 31st August and has no leave balances, so it is considered as Loss of Pay (LOP). His salary is Rs. 30,000 per month. How many days' salary should be paid to this employee?

Case 2: Employee absent from 26th August to 24th September

Another employee did not attend the company from 26th August to 24th September. He has no leave balance, so the absent days are considered as LOP. His salary is Rs. 30,000 per month. In this case, how many days' salary should be paid to this employee?

Please provide a solution on how to calculate the salary for the above two cases.

The salary calculation in both cases will be based on the 'Loss of Pay' (LOP) method considering the employee's absence without any leave balance.

Case 1:
- The employee was absent from the 26th to the 31st of August, which amounts to 6 days.
- As your salary calculation period is from the 26th of the previous month to the 25th of the current month, these 6 days will be considered for the September salary.
- The daily wage is calculated as Rs. 30,000/30 = Rs. 1,000 per day (considering a standard month has 30 days).
- The loss of pay for 6 days would be Rs. 1,000 * 6 = Rs. 6,000.
- Hence, the salary paid to this employee for September would be Rs. 30,000 - Rs. 6,000 = Rs. 24,000.

Case 2:
- The employee was absent from the 26th of August to the 24th of September, which amounts to 30 days.
- Following the same daily wage calculation as above, the loss of pay for 30 days would be Rs. 1,000 * 30 = Rs. 30,000.
- In this case, the employee was absent for the entire pay period. Therefore, he will not receive any salary for the month of September.

Please remember, these calculations are made assuming a standard month is considered to have 30 days for the purpose of salary calculation, which is a common practice in many organizations. However, please check your company's specific policies and any relevant labor laws to ensure compliance.

📶Please note: For accurate salary calculations, it's crucial to consider the specific salary structure, allowances, deductions, and statutory components that are part of an employee's compensation. The calculations above are made on the basic salary alone and are for illustrative purposes.

We did not understand Case 2. I mean, the salary should be prepared every month.