Hi friends,
If an employee has been given a back-dated salary hike how is the payment made for the salary differential from the back-date in the new payslip. Should it come seperately as arrears in the payslip or should it be reflected in the new payslip for each salary component (eg. BASIC + BASIC (differential), DA + DA(differential) etc)?
Also what happens in case an employee is marked absent for a day when he was earning less than his current salary and he was not paid for that day in the last salary. However, it is rectified thereafter as being present and hence payable to the employee in the next salary. How is this amount paid? Is it paid as adjusted pay?
I look forward to your help.
Best regards,
Nitin
From India, Mormugao
If an employee has been given a back-dated salary hike how is the payment made for the salary differential from the back-date in the new payslip. Should it come seperately as arrears in the payslip or should it be reflected in the new payslip for each salary component (eg. BASIC + BASIC (differential), DA + DA(differential) etc)?
Also what happens in case an employee is marked absent for a day when he was earning less than his current salary and he was not paid for that day in the last salary. However, it is rectified thereafter as being present and hence payable to the employee in the next salary. How is this amount paid? Is it paid as adjusted pay?
I look forward to your help.
Best regards,
Nitin
From India, Mormugao
Hi Nitin,
The salary if it is increased with retrospective effect, it will be paid in the form of arrears if you and your management are not so particular about statutory remittances like PF, ESI etc. If particular, then you have to calculate the Basic and other components to make those payments accordingly.
It is the effective date which matters for calculation of any back wages and in this case also the same principle applies.
Hope you got the required clarification.
Regards,
PRADEEP
From India, Hyderabad
9The salary if it is increased with retrospective effect, it will be paid in the form of arrears if you and your management are not so particular about statutory remittances like PF, ESI etc. If particular, then you have to calculate the Basic and other components to make those payments accordingly.
It is the effective date which matters for calculation of any back wages and in this case also the same principle applies.
Hope you got the required clarification.
Regards,
PRADEEP
From India, Hyderabad
Hi Pradeep,
Thanks for your prompt response. Well I understand what you are saying and we are taking care of the differential basic,da etc for calculating the differential PF/ESI etc. The only confusion is whether that differential amount will be summed up across all salary components and paid as arrears to the employee in the next payslip or each component will be incremented by the corresponding differential amount.
To illustrate:
If X has a Basic =3000 and DA=1000 in Oct and Nov 2006 and his basic and DA change to 6000 and 2000 respectively in Dec 2006 with retrospective effect from Oct 2006, then he has to be paid a differential Basic of 6000 and 2000 for the months Oct and Nov 2006 over and above the salary for the month of Dec 2006. Now differential(Basic+DA)=8000 will be used for PF/ESI etc calculations.
The precise question I have is will the differential amount of 8000 be reflected in the Dec 2006 salary of the employee look as below:
Basic=Rs 6000/-
DA=Rs 2000/-
Arrears=Rs 8000/-
or will it be as follows:
Basic=Rs.12000/-
DA=Rs4000/-
Now in case the employee took 1 day of unpaid leave in Aug 2006 (note its Aug and not Oct and assume he was earning same amounts in Aug as in Oct) and lost pay for that day in Aug 2006 salary. However, it was found that the employee was actually present and hence has to be paid back the amount he was not paid in Dec 2006 salary. How will his salary look? Will it be
Basic=Rs 6000/- + Basic lost for that day (@Basic=3000)
DA=Rs 6000/- + DA lost for that day(@DA=1000)
Arrears=Rs 8000/-
or will its be
Basic=Rs6000/-
DA=Rs2000/-
Arrears=Rs8000/- +Basic lost for that day(@Basic=3000)
+DA lost for that day(@DA=1000)
or will it be
Basic=Rs.12000/- + Basic lost for that day (@Basic=3000)
DA=Rs4000/-+ DA lost for that day(@DA=1000)
I hope I have been able to clarify my query in more detail.
Cheers,
Nitin
From India, Mormugao
Thanks for your prompt response. Well I understand what you are saying and we are taking care of the differential basic,da etc for calculating the differential PF/ESI etc. The only confusion is whether that differential amount will be summed up across all salary components and paid as arrears to the employee in the next payslip or each component will be incremented by the corresponding differential amount.
To illustrate:
If X has a Basic =3000 and DA=1000 in Oct and Nov 2006 and his basic and DA change to 6000 and 2000 respectively in Dec 2006 with retrospective effect from Oct 2006, then he has to be paid a differential Basic of 6000 and 2000 for the months Oct and Nov 2006 over and above the salary for the month of Dec 2006. Now differential(Basic+DA)=8000 will be used for PF/ESI etc calculations.
The precise question I have is will the differential amount of 8000 be reflected in the Dec 2006 salary of the employee look as below:
Basic=Rs 6000/-
DA=Rs 2000/-
Arrears=Rs 8000/-
or will it be as follows:
Basic=Rs.12000/-
DA=Rs4000/-
Now in case the employee took 1 day of unpaid leave in Aug 2006 (note its Aug and not Oct and assume he was earning same amounts in Aug as in Oct) and lost pay for that day in Aug 2006 salary. However, it was found that the employee was actually present and hence has to be paid back the amount he was not paid in Dec 2006 salary. How will his salary look? Will it be
Basic=Rs 6000/- + Basic lost for that day (@Basic=3000)
DA=Rs 6000/- + DA lost for that day(@DA=1000)
Arrears=Rs 8000/-
or will its be
Basic=Rs6000/-
DA=Rs2000/-
Arrears=Rs8000/- +Basic lost for that day(@Basic=3000)
+DA lost for that day(@DA=1000)
or will it be
Basic=Rs.12000/- + Basic lost for that day (@Basic=3000)
DA=Rs4000/-+ DA lost for that day(@DA=1000)
I hope I have been able to clarify my query in more detail.
Cheers,
Nitin
From India, Mormugao
Dear Nitin,
You can make the salary slip of Dec.06 as follows (As per your illustration)
Basic : 6000
Basic (Areers) : 6000
Basic (Areers for Lost Day) : @3000
DA : 2000
DA (Areers) : 2000
DA (Areers for Lost Day) : @1000
So on
Hope it is clear to you now.
Regards,
Sree
From United States
You can make the salary slip of Dec.06 as follows (As per your illustration)
Basic : 6000
Basic (Areers) : 6000
Basic (Areers for Lost Day) : @3000
DA : 2000
DA (Areers) : 2000
DA (Areers for Lost Day) : @1000
So on
Hope it is clear to you now.
Regards,
Sree
From United States
Dear Nitin,
If an employee is paid back dated hiked salary, the same should be reflected in the arrear column otherwise during the inspection by any statutory body, you will find difficulty in explaining the same.
In the second case also the balance can be paid as arrears.
Regards,
B. S. Negi
[/quote]
From United States, Santa Clara
If an employee is paid back dated hiked salary, the same should be reflected in the arrear column otherwise during the inspection by any statutory body, you will find difficulty in explaining the same.
In the second case also the balance can be paid as arrears.
Regards,
B. S. Negi
[/quote]
From United States, Santa Clara
Hi Friends,
What will be the status of ESIC deduction if arrear due and paid not fall in the same contribution period . In that case whether ESIC amount to be deducted from arrear salary? If so what is the procedure?
Please respond.
Regards,
Suvajit
From India, Delhi
What will be the status of ESIC deduction if arrear due and paid not fall in the same contribution period . In that case whether ESIC amount to be deducted from arrear salary? If so what is the procedure?
Please respond.
Regards,
Suvajit
From India, Delhi
Dear Nitin, ESI should be deducted on arrears also as it is also the part of wages Regards, B. S. Negi
From United States, Santa Clara
From United States, Santa Clara
Sorry to reopen this thread. I was wondering what happens in case you have to deduct pay if the scenario mentioned above were to be reversed i.e the employee's new pay is less than what he earned earlier or if he had to lose pay for a day that he was paid earlier inspite of him being absent. How would it be reflected in his latest salary slip?
Regards,
Nitin
From India, Mormugao
Regards,
Nitin
From India, Mormugao
Dear Nkitin :
Usually, the salary cannot be reduced - but if the DA payable becomes less, then the salary can be reduced but I do not think as otherwise.
Also, for the days of absence, both the existing salary and the revised salary need not be paid based on no work no pay basis.
The dues of ESI, PF etc have to be paid separately as arrears.
To keep your company clear of any statutory failures, please arrange to pay the arrears payable for all statutory whether the employees like or not.
For any more clarfiication, pls let me know.
Regards
:: Dhinakaran
From India, Hyderabad
Usually, the salary cannot be reduced - but if the DA payable becomes less, then the salary can be reduced but I do not think as otherwise.
Also, for the days of absence, both the existing salary and the revised salary need not be paid based on no work no pay basis.
The dues of ESI, PF etc have to be paid separately as arrears.
To keep your company clear of any statutory failures, please arrange to pay the arrears payable for all statutory whether the employees like or not.
For any more clarfiication, pls let me know.
Regards
:: Dhinakaran
From India, Hyderabad
Dear Dhinakaran,
Thanks for your response. What I basically want to know is if by mistake an employee is paid extra in the last payroll, then how do we show the reversal of that surplus paid in the next salary slip. Under what salary component should it be reflected? Would that also be called arrears?
Regards,
Nitin
From India, Mormugao
Thanks for your response. What I basically want to know is if by mistake an employee is paid extra in the last payroll, then how do we show the reversal of that surplus paid in the next salary slip. Under what salary component should it be reflected? Would that also be called arrears?
Regards,
Nitin
From India, Mormugao
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