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How to calculate salary as per labour law ?

This query is : Resolved 

04 August 2009

How to Calculate Your Daily/Monthly/Annual Salary After attenance

If the employer pays you an Monthly salary, Multiply it by 12 to get your annual salary and divide 365 days to get salary per day and than deduct salary/day
As per absent. Is this the right way, what does the labour law says, how to calulate

e.g 7000 is monthly salary x 12 = 84000
84000 divide by 365 = Rs 230 /Day

Feb : 230 x 28 = 6440
June : 30 days 230 x 30 = 6990
July : 31 days 230 x31 = 7130

deducting any absent no of days

How to calculate as per labour law

Advocate SK Rohilla New Delhi (Expert)
04 August 2009

There is three types of employments namely
Daily Rated, Monthly Rated and Contract Rated.

In case of daliy rated employees , wages are to be paid on the basis of days on which they performed or attended the work.

In case of contract the amount is to be paid as per terms of contract i.e on monthly , fortnightly or on completion of work.

In case of monthly rated salary is for full month i.e for 30 or 31 days.

Now under Payment of wages act or Minimum Wages Act, to work out daily rate of salary , gross salary is to de divided by number of days of the month. It is not very clear under any law that it has to be taken only for total number of working days in the month.

If we assume the working days as basis and also if a holiday falls during the month( as declared under national & festival holidays), then in that we can not change the base by further reducing the number of working days.

Under the payment of wages act , the objective was to create a rational base. One rest day after every six working days is guide line under the law and payment for this is to be adjusted in the monthly rated base. There is rational behind doing the same.

As far as in the factory if they are not taking allowance into consideration for deduction of salary / wages, then they might have introduced a policy to that effect. Number of organisations are adopting this policy and they are also paying leave encashments on the basis of 26 working days. If you are deducting higher than the prescribed and if you are deducting on basis which works out to be less than that of normal. Then it does not fall under the violation clause.

In my opinion it is on rational basis of 30 or 31 days of one month in the case of monthly rated employees. In case of bifurcated salary we can assume further basis for deductions but in case of consolidated , the amount has be taken as single component. Again, it is for the management to decide and adopt the basis as per their convenience..

I hope this clarifies your doubts.

Adv. Prashant Mali [MSc(CS),LL (Expert)
04 August 2009

Yet no law has defined , the count of days to be taken while calculating daily wage are number of the days the labour attends, even the NREGA(National Rural Employment Gurantee Act) have no provision for leaves

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