My company's pay cycle is from the 24th to the 25th of each month. Therefore, based on this, I have the following queries:
1. If the calendar month has 31 days, but in my calculation, it amounts to 30 days due to the application of the aforementioned pay cycle, how many days' payment should I calculate as per statutory requirements?
2. If someone joins on the 26th of any month, should we pay them for that month, or will it be included in the following month's salary since our pay cycle runs from the 24th to the 25th?
Thank you.
From India, Kolkata
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1. If the calendar month has 31 days, but in my calculation, it amounts to 30 days due to the application of the aforementioned pay cycle, how many days' payment should I calculate as per statutory requirements?
2. If someone joins on the 26th of any month, should we pay them for that month, or will it be included in the following month's salary since our pay cycle runs from the 24th to the 25th?
Thank you.
From India, Kolkata
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In order to sort out such anomalies, you can change your pay period/attendance period from the 26th of the previous month to the 25th of the current month with the approval of management. This should be the ideal pay cycle.
From India, Aizawl
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651From India, Aizawl
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Understanding the Pay Cycle and Salary Calculations
The pay cycle should be from the 25th of the previous month to the 24th of the succeeding month. This provides a week's time to make salary calculations. The payment of wages must be made within seven days if the number of employees is less than 1,000; otherwise, it should be paid within ten days of the end of the wage period (refer to Section 5 of the Payment of Wages Act 1936).
Reassessing the Need for a One-Week Gap
With the type of easier software available now, you may reassess whether you need the one-week gap to make such calculations. Another method could be to take actual attendance up to the 25th and presume continued attendance/absence for the next week. If there is any excess payment, it is deducted from the next salary, or if any further payment is needed, it can be made by supplementary payment within the extended time as applicable.
From India, Mumbai
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The pay cycle should be from the 25th of the previous month to the 24th of the succeeding month. This provides a week's time to make salary calculations. The payment of wages must be made within seven days if the number of employees is less than 1,000; otherwise, it should be paid within ten days of the end of the wage period (refer to Section 5 of the Payment of Wages Act 1936).
Reassessing the Need for a One-Week Gap
With the type of easier software available now, you may reassess whether you need the one-week gap to make such calculations. Another method could be to take actual attendance up to the 25th and presume continued attendance/absence for the next week. If there is any excess payment, it is deducted from the next salary, or if any further payment is needed, it can be made by supplementary payment within the extended time as applicable.
From India, Mumbai
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Dear Rini,
Please note one important finding of your case; it is not just about the salary of the employee who joined after the cut-off date of payroll. In this case, you will run his/her payroll in the next month along with the arrears of the previous month's salary. Once you process the arrears salary, then you have to deposit the PF for the employee.
When you deposit the arrear PF of the employee at the end of the FY, you will receive a notice from the PF office to deposit the interest and damages on the arrear PF deposited by the company. This will incur extra liability on the company.
To avoid such a situation, it is advised that you freeze the joining after the cutoff date of payroll, i.e., the 25th of every month. You can hire a new employee on the 1st of the next month. If this is not possible, be prepared to pay the interest and damages on the arrear salary processed.
For further clarity, please feel free to write to us at [Email Removed For Privacy Reasons].
From India, New Delhi
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Please note one important finding of your case; it is not just about the salary of the employee who joined after the cut-off date of payroll. In this case, you will run his/her payroll in the next month along with the arrears of the previous month's salary. Once you process the arrears salary, then you have to deposit the PF for the employee.
When you deposit the arrear PF of the employee at the end of the FY, you will receive a notice from the PF office to deposit the interest and damages on the arrear PF deposited by the company. This will incur extra liability on the company.
To avoid such a situation, it is advised that you freeze the joining after the cutoff date of payroll, i.e., the 25th of every month. You can hire a new employee on the 1st of the next month. If this is not possible, be prepared to pay the interest and damages on the arrear salary processed.
For further clarity, please feel free to write to us at [Email Removed For Privacy Reasons].
From India, New Delhi
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(Fact Checked)-The user's reply contains accurate information based on the Payment of Wages Act 1936. The details provided align with the legal requirements for payment cycles and timelines. (1 Acknowledge point)