Respected intelligentsia, please clarify for me. I am presenting regarding staff attendance maintained by companies in recent times. Usually, a month is defined as 30 or 31 days to everyone, but in companies, there is a special formula. The current trend suggests that from the 26th of this month to the 25th of the next month is considered a month. How is this acceptable? Workers may miss government-declared holidays, leading to a lot of confusion when calculating the received salary for the month.
Suppose a worker is paid on or before the 7th of the month for the last worked month, which is the correct calculation. However, if the payment period spans from the 25th to the 24th of the consecutive month, confusion arises about which month's salary the worker was paid for. Elders, HR professionals, and auditors, please clarify this for me.
Submitted.
From India, Nellore
Acknowledge(0)
Amend(0)
86Suppose a worker is paid on or before the 7th of the month for the last worked month, which is the correct calculation. However, if the payment period spans from the 25th to the 24th of the consecutive month, confusion arises about which month's salary the worker was paid for. Elders, HR professionals, and auditors, please clarify this for me.
Submitted.
From India, Nellore
Acknowledge(0)Amend(0)
Just assume that you are paying 4 days(27 to 30/31) salary advance to the employees, and when he left the job the days what ever he worked he will get salary for those days.
From India, Hyderabad
Acknowledge(0)Amend(0)
From India, Hyderabad
Acknowledge(0)Amend(0)
Dear Gannahope,
It's common practice in many establishments to close the attendance on any day in a calendar month, not necessarily on the 30th or 31st. What's important here is to account for the attendance of employees for a full month. This situation arises when verifying the attendance of all units and teams located in far-flung or remote areas, especially in project sites. There are practical difficulties in closing the attendance at the end of the month, such as on the 28th/29th, 30th, or 31st, and then reaching the data in time for the payroll processor located in the central office. This is crucial for the preparation of payrolls and arranging remittances to the employees' bank accounts to meet the stipulated 7th or 10th day of the calendar month.
To streamline this process, a solution is to consider a day like the 15th or 19th (or similar) as the start of the payroll cycle, which would end or close on the 14th or 18th, depending on the scenario. In this method, all leave taken, absences, official tours, and holiday data are recorded on the respective days. This approach ensures there are no missing links or errors leading to underpayments or overpayments. This method is expected to eliminate any hassles. I have firsthand experience with this approach from managing over 14,000 employees across 29 sites scattered throughout India, spanning from J&K/UP to Kerala. If you have any specific concerns, I am happy to provide clarification.
From India, Bangalore
Acknowledge(0)Amend(0)
0
0
It's common practice in many establishments to close the attendance on any day in a calendar month, not necessarily on the 30th or 31st. What's important here is to account for the attendance of employees for a full month. This situation arises when verifying the attendance of all units and teams located in far-flung or remote areas, especially in project sites. There are practical difficulties in closing the attendance at the end of the month, such as on the 28th/29th, 30th, or 31st, and then reaching the data in time for the payroll processor located in the central office. This is crucial for the preparation of payrolls and arranging remittances to the employees' bank accounts to meet the stipulated 7th or 10th day of the calendar month.
To streamline this process, a solution is to consider a day like the 15th or 19th (or similar) as the start of the payroll cycle, which would end or close on the 14th or 18th, depending on the scenario. In this method, all leave taken, absences, official tours, and holiday data are recorded on the respective days. This approach ensures there are no missing links or errors leading to underpayments or overpayments. This method is expected to eliminate any hassles. I have firsthand experience with this approach from managing over 14,000 employees across 29 sites scattered throughout India, spanning from J&K/UP to Kerala. If you have any specific concerns, I am happy to provide clarification.
From India, Bangalore
Acknowledge(0)Amend(0)CiteHR.AI
(Fact Checked)-The user's reply is generally correct regarding the flexibility in closing attendance cycles for payroll processing, especially in remote locations. However, it's essential to ensure compliance with labor laws and accurate payment calculations. (1 Acknowledge point)
0
0
Dear Gannahope,
"Month" is not defined anywhere as a calendar month, and therefore many establishments count the days for computing attendance for salary purposes beginning from any administratively set date, generally from the 25th, 26th, or 27th, etc. There is nothing wrong with this practice per se, but you are required to make the payment on the 7th or 10th day, as applicable, at the end of the wage period. The wage period cannot exceed one month. I need not remind you of these details since you hold the position of Dy. Commissioner of Labour.
However, having the wage period not aligned with the calendar month creates various issues. Individuals joining or leaving in the middle of the month cause many complications. It also poses problems when submitting the ECR under PF.
Therefore, I suggest the following:
1. Have a fixed cut-off date.
2. Presume full attendance after the fixed cut-off date.
3. You can set a different cut-off date for each month.
4. If an employee remains absent on loss of pay after the fixed cut-off date, that absence should be adjusted in the next month.
5. By following these steps, the wage period will align with the calendar month, eliminating all confusions.
I hope you will appreciate my proposed solution.
From India, Mumbai
Acknowledge(0)Amend(0)
0
0
"Month" is not defined anywhere as a calendar month, and therefore many establishments count the days for computing attendance for salary purposes beginning from any administratively set date, generally from the 25th, 26th, or 27th, etc. There is nothing wrong with this practice per se, but you are required to make the payment on the 7th or 10th day, as applicable, at the end of the wage period. The wage period cannot exceed one month. I need not remind you of these details since you hold the position of Dy. Commissioner of Labour.
However, having the wage period not aligned with the calendar month creates various issues. Individuals joining or leaving in the middle of the month cause many complications. It also poses problems when submitting the ECR under PF.
Therefore, I suggest the following:
1. Have a fixed cut-off date.
2. Presume full attendance after the fixed cut-off date.
3. You can set a different cut-off date for each month.
4. If an employee remains absent on loss of pay after the fixed cut-off date, that absence should be adjusted in the next month.
5. By following these steps, the wage period will align with the calendar month, eliminating all confusions.
I hope you will appreciate my proposed solution.
From India, Mumbai
Acknowledge(0)Amend(0)CiteHR.AI
(Fact Checked)-The user's reply contains accurate information and provides a practical solution to the issue raised in the original post. The suggestions given align with good HR practices and can help in streamlining attendance and payroll processes. (1 Acknowledge point)
0
0
Dear Mr. Gannahope,
This is in continuation of what Mr. Kumar has said about the interesting issue you raised.
The days of a month generally differ according to the calendar to which it belongs. Of course, every calendar year has invariably 12 months only. But the average number of days per month differs whether the calendar is based on the earth's movement around the Sun, i.e., Solar Year, or the Moon's movement, i.e., Lunar Year. Thus, in a regular Solar year, a month comprises 30.42 days (365/12) and in a leap year 30.50 days (366/12). The Gregorian Calendar adopted by Great Britain and its colonies is based on the Moon in which the number of days in a month alternate between 30 and 29 days (365.2425/12 = 30.44 days). Therefore, for the sake of ease of calculation, a calendar month is generally taken to be of 30 days. An example is the conversion of the monthly rate of statutory minimum wage to that of the daily rate and vice versa.
However, when we analyze the general practice followed in some industrial establishments in the statutory backdrop, I am not able to find any anomaly as such you referred. Both the Payment of Wages Act, 1936 (Sec.4(2)) and the Code on Wages, 2019 (Sec.16) prescribe the wage period not exceeding a month though the term 'month' has not been defined. Besides, both laws prescribe the time limit for payment in case of a monthly wage period only as the 7th day of the succeeding month and not as the succeeding calendar month. Therefore, if the wage period is fixed as starting from the 25th day of the current calendar month to the 24th of the following calendar month, the wages should be disbursed on or before the 7th day from the 24th of the following calendar month. The month covering more number of days in the wage period/payroll cycle can be mentioned as the month.
When the Government of India is thinking of changing "the assessment year" under the Income Tax Act from the financial year to the calendar year for the sake of easy understanding of the taxpayers, the change you suggested is a welcome one, but the practical difficulties pointed out by Mr. Kumar are also worthy of consideration.
From India, Salem
Acknowledge(0)Amend(0)
0
0
This is in continuation of what Mr. Kumar has said about the interesting issue you raised.
The days of a month generally differ according to the calendar to which it belongs. Of course, every calendar year has invariably 12 months only. But the average number of days per month differs whether the calendar is based on the earth's movement around the Sun, i.e., Solar Year, or the Moon's movement, i.e., Lunar Year. Thus, in a regular Solar year, a month comprises 30.42 days (365/12) and in a leap year 30.50 days (366/12). The Gregorian Calendar adopted by Great Britain and its colonies is based on the Moon in which the number of days in a month alternate between 30 and 29 days (365.2425/12 = 30.44 days). Therefore, for the sake of ease of calculation, a calendar month is generally taken to be of 30 days. An example is the conversion of the monthly rate of statutory minimum wage to that of the daily rate and vice versa.
However, when we analyze the general practice followed in some industrial establishments in the statutory backdrop, I am not able to find any anomaly as such you referred. Both the Payment of Wages Act, 1936 (Sec.4(2)) and the Code on Wages, 2019 (Sec.16) prescribe the wage period not exceeding a month though the term 'month' has not been defined. Besides, both laws prescribe the time limit for payment in case of a monthly wage period only as the 7th day of the succeeding month and not as the succeeding calendar month. Therefore, if the wage period is fixed as starting from the 25th day of the current calendar month to the 24th of the following calendar month, the wages should be disbursed on or before the 7th day from the 24th of the following calendar month. The month covering more number of days in the wage period/payroll cycle can be mentioned as the month.
When the Government of India is thinking of changing "the assessment year" under the Income Tax Act from the financial year to the calendar year for the sake of easy understanding of the taxpayers, the change you suggested is a welcome one, but the practical difficulties pointed out by Mr. Kumar are also worthy of consideration.
From India, Salem
Acknowledge(0)Amend(0)CiteHR.AI
(Fact Checked)-The user's reply contains accurate information regarding the average number of days in a month and the payment of wages laws. The explanation provided aligns with the relevant laws and practices in India. (1 Acknowledge point)
0
0
Payroll calculation is done based on the leave period from the 26th of the last month to the 25th of the current month in big companies where the employee force is on the higher side. This practice is still followed in many good companies - I am aware. While this practice may not be appreciated in companies where the employee force is 100/200 or below, it is a good practice for companies employing more than 500 or 1000 staff. The reason for this method of calculation is to scrutinize and regularize the leave details of all employees by the Time Office department and advise the pay of all employees (by regulating their credit and debit of leaves) to Accounts by the 30th or 31st. They will have five days to complete this process. After receiving advice from the Time Office, the Accounts department processes the payslip and initiates the fund transfer to the bank for crediting to employees' accounts.
Thus, if any employee takes leave in the current month after the 25th, it will be considered for regularization/LOP in the next month's salary.
From India, Aizawl
Acknowledge(0)Amend(0)
0
0
Thus, if any employee takes leave in the current month after the 25th, it will be considered for regularization/LOP in the next month's salary.
From India, Aizawl
Acknowledge(0)Amend(0)CiteHR.AI
(Fact Check Failed/Partial)-The user's reply is incorrect. The standard practice for payroll calculation should align with the actual calendar month. It is not advisable to shift the month definition from the 26th to the 25th for payroll purposes. This deviation can lead to confusion and potential discrepancies in leave accruals and salary calculations.
0
0
Yes, thanks to all for your kind contributions and opinions.
I believe it is true for big companies with a larger employee following that the above is comfortable for them (management). However, I disagree as it is not useful for daily contract laborers and employees in the last cadre such as housekeeping and other small-scale positions.
There is one act, the National Festival and Other Holidays Act of 1986. For instance, in January, the 13th, 14th, or 15th are festivals like Bhogi, Sankranthi, and Kanuma, and the 26th is Republic Day. Daily laborers miss out on these holidays. Additionally, whether the worker was given the NFOH holiday in a particular month cannot be confirmed by the worker. For example, if we ask him in January, he might not have received the NFOH holiday because it fell in February, according to the calculation that considers the period from the 25th to the 24th of the next month as a month. The calculation of enhanced Variable Dearness Allowance (VDA) is also confusing.
Therefore, the Central Government should consider and implement a universally recognized calendar month and year. Please consider this. 🙏
From India, Nellore
Acknowledge(0)Amend(0)
0
0
I believe it is true for big companies with a larger employee following that the above is comfortable for them (management). However, I disagree as it is not useful for daily contract laborers and employees in the last cadre such as housekeeping and other small-scale positions.
There is one act, the National Festival and Other Holidays Act of 1986. For instance, in January, the 13th, 14th, or 15th are festivals like Bhogi, Sankranthi, and Kanuma, and the 26th is Republic Day. Daily laborers miss out on these holidays. Additionally, whether the worker was given the NFOH holiday in a particular month cannot be confirmed by the worker. For example, if we ask him in January, he might not have received the NFOH holiday because it fell in February, according to the calculation that considers the period from the 25th to the 24th of the next month as a month. The calculation of enhanced Variable Dearness Allowance (VDA) is also confusing.
Therefore, the Central Government should consider and implement a universally recognized calendar month and year. Please consider this. 🙏
From India, Nellore
Acknowledge(0)Amend(0)CiteHR.AI
(Fact Check Failed/Partial)-The user's reply contains inaccuracies regarding the calculation of the salary month based on the 25th to 24th of the consecutive month and the National Festival and Other Holidays Act 1986. It's important to note that labor laws and salary calculations are not based on this method. Further clarification on these aspects is recommended.
0
0
I came across this issue of the date of billing to clients or salary to be made by the contractors on the 25th of each month following the month pattern of the 26th to the 25th of the month. This is mostly asked by CAs of the companies so that their reconciliation and closure of monthly transactions are done in time, enabling them to manage their returns in time as per the IT departments.
However, it is nowhere made mandatory to follow such a pattern if the best accounting and finance procedures are prompt and punctual. The other aspect of following such a pattern of 26/25 as a month is that during business operations, the transaction of payments may get delayed or, for accounting purposes, changed from one party to another.
Having said this, I believe if a system is adapted for the betterment of employees and smooth business operations, there is no harm in implementing it in good faith.
From India, Vadodara
Acknowledge(0)Amend(0)
0
0
However, it is nowhere made mandatory to follow such a pattern if the best accounting and finance procedures are prompt and punctual. The other aspect of following such a pattern of 26/25 as a month is that during business operations, the transaction of payments may get delayed or, for accounting purposes, changed from one party to another.
Having said this, I believe if a system is adapted for the betterment of employees and smooth business operations, there is no harm in implementing it in good faith.
From India, Vadodara
Acknowledge(0)Amend(0)CiteHR.AI
(Fact Check Failed/Partial)-The user's reply contains some inaccuracies. The concept of defining a month from the 26th of one month to the 25th of the next month for billing or salary purposes does not align with standard labor laws or practices. It's crucial to adhere to clear and consistent payroll practices to avoid confusion and ensure compliance with labor regulations. Relevant labor laws and regulations should be followed for accurate salary calculations and adherence to government-declared holidays.
0
0
Hi Bijay
So far as i know no auditor will interfere or insist anything what your salary cycle should be. It has got nothing to do with filing of IT returns either. I worked in payrolls, finance & accounts, audit and HR for a very big CPSU, state & central govt. departments, about 4-5 pvt.sector Cos, autonomous institutions as well during my 44 yrs of service nothing that sort has happened. Only stipulation legally is that every estt should disburse salary to their employees on or before 7th or 10th every month for the pertinent previous month (once in a month). To suit this date of disbursement estts can decide to follow the cycle convenient to the estts cosidering the constraints. All that what auditors should ensure is the Profit and Loss a/c of the estts should have been debited with one full year of employees’ salary, whether paid before 31st march or subsequently (as provision for accrued expenses) . There is an accounting standard relating to this (AS 15-Employees Benefits, deals with all the forms of employee benefits, all forms of consideration given by an enterprise in exchange for the services rendered by employees) which stipulates the mandatory provisions to be followed to this effect. Entire sequence is very simple and hassle free if planned & flow of feed of data is clear, adequate & timely. And there’s no need to stress upon good faith etc.
From India, Bangalore
Acknowledge(1)
Amend(0)
0
0
So far as i know no auditor will interfere or insist anything what your salary cycle should be. It has got nothing to do with filing of IT returns either. I worked in payrolls, finance & accounts, audit and HR for a very big CPSU, state & central govt. departments, about 4-5 pvt.sector Cos, autonomous institutions as well during my 44 yrs of service nothing that sort has happened. Only stipulation legally is that every estt should disburse salary to their employees on or before 7th or 10th every month for the pertinent previous month (once in a month). To suit this date of disbursement estts can decide to follow the cycle convenient to the estts cosidering the constraints. All that what auditors should ensure is the Profit and Loss a/c of the estts should have been debited with one full year of employees’ salary, whether paid before 31st march or subsequently (as provision for accrued expenses) . There is an accounting standard relating to this (AS 15-Employees Benefits, deals with all the forms of employee benefits, all forms of consideration given by an enterprise in exchange for the services rendered by employees) which stipulates the mandatory provisions to be followed to this effect. Entire sequence is very simple and hassle free if planned & flow of feed of data is clear, adequate & timely. And there’s no need to stress upon good faith etc.
From India, Bangalore
Acknowledge(1)Amend(0)CiteHR.AI
(Fact Checked)-The user's reply contains accurate information regarding the disbursement of salaries and the role of auditors in ensuring proper accounting practices. The details provided align with the general practices followed in organizations. (1 Acknowledge point)
0
0
Thank you, Kumar Sir. Eventually, it has been originated to facilitate avoiding hassles of reconciliation at the closure of the month. It has its origin from financial or accounts departments to settle everything in scheduled timelines and in accordance with the statutes.
I had a similar query with the CA of my client regarding why and how this month format is changed. His answer was as above.
From India, Vadodara
Acknowledge(0)Amend(0)
0
0
I had a similar query with the CA of my client regarding why and how this month format is changed. His answer was as above.
From India, Vadodara
Acknowledge(0)Amend(0)CiteHR.AI
(Fact Check Failed/Partial)-The user reply is partially correct. While it is true that the change in month format aims to streamline processes, the calculation of salary based on the 26th to 25th timeline can lead to confusion and potential issues with government-declared holidays. It's essential to ensure clarity and compliance with labor laws for salary calculations.
0
0
Engage with peers to discuss and resolve work and business challenges collaboratively - share and document your knowledge. Our AI-powered platform, features real-time fact-checking, peer reviews, and an extensive historical knowledge base. - Join & Be Part Of Our Community.
SALARY SHEET CALCULATION.xls
Salary calculation.doc
CiteHR.AI
(Fact Check Failed/Partial)-The user reply is incorrect. According to labor laws, salary must cover the entire month, not partial days. It should be based on actual days worked.