Computation of Salary : 26 / 31 Days...?

This query is : Resolved 

02 August 2008

Dear Experts,

I have doubt. Till now in my experience we are considering 30 / 31 / 28 days as the basis for salary computation. Where as the actual wage should be 26 days only. even we calculate gratuity for 26 base only.

then my doubt is that while calculating..the lop and net salary which method should be followed and any rule / act to refer as under:

1. Earned Salary = Actual Gross / No. of total days in a month * Actual working days.

2. Earned Salary = Actual Gross / 26 * Actual Working Days.

which is the correct Method ? I have been asked by the management that when we are paying for 26 days (gratuity), why cannot we calculate for 26 days for payroll also instead of 30 / 31 days ...?

please clafify.

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H. S. Thukral (Expert)
02 August 2008

Dear Mr. Balaram
I have not properly understood your query.
In any organisation the permanent employees are paid on monthly basis and irrespective of number of working days in a month they are paid gross salary as per terms of the contract. However in case of daily wage employees, one day wage is calculated by dividing the monthly wage by 26 and paid for actual number of days worked. In case of monthly rated permanent employees, they are entitiled to a statutory paid weekly off. If the deduction for any unauthorised leave is to be made from the wages, gross salary would be divided by 31 to arive at rate of deduction per day. Logically if the absence is continuous for six days, weekly off should be considered in 'absent' days.
If you intend to pay your employees on the basis of actual number of days worked then the formula at Sr. No. 2 shall be applicable.

Balaram (Querist)
04 August 2008

I am sorry Mr. Harbhajan. I m not clear.

As it is stated by you, we need to remember that one paid holiday will be given for 6 continues working days. and while calculating LOP only 31 / 30 should be the base.

As far as Minimum Wages Gezette also, what ever you said ( for deriving daily monthly gross+da / 26 should be the formula).

Here, my boss says why cannot we do it for 26 days for deducting LOP where we are SUPPOSED to do 26 days only in the case of Gratuity as per Gratuity Act. so, i have not come across any such kind of procedure where 26 is the base for calculating LOP.
Now, is there any documentary evidence / law / act that i can use it to convince him that Gratuity cannot be compared with Attendance system and it should be 30 / 31 ?

And what happens if we deduct LOP on the basis of 26 ? Is there any chance of agitation from employees on this issue ?

H. S. Thukral (Expert)
04 August 2008

It is difference in the definition of wages in Payment of Gratuity Act and other industrial laws defining Wages. To be more clear kindly go through the latest case law Guru Jambheshwar University v Dharam Pal 2007 AIR (SC) 1040.

adv. rajeev ( rajoo ) (Expert)
18 March 2009

salary always on monthly basis. so on monthly basis u have to calculate

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