Dear All,
I have come across an interesting situation as follows: Our employees are permanent employees employed for a specific monthly salary. On the payslip, it is shown that the employee has worked for 26 days and had 4 days off. The Labour Inspector is saying that we cannot divide the employee's salary by 30 days; it needs to be divided by 26 days. The logic he is giving is that, as per the law, after working for 6 days, the employee is entitled to 1 day off per week. Therefore, we cannot claim that we are paying for the employee's day off. If I divide the monthly salary by 26 days, then the daily rate of wages becomes higher. What is your opinion?
Thank you.
From India, Mumbai
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21I have come across an interesting situation as follows: Our employees are permanent employees employed for a specific monthly salary. On the payslip, it is shown that the employee has worked for 26 days and had 4 days off. The Labour Inspector is saying that we cannot divide the employee's salary by 30 days; it needs to be divided by 26 days. The logic he is giving is that, as per the law, after working for 6 days, the employee is entitled to 1 day off per week. Therefore, we cannot claim that we are paying for the employee's day off. If I divide the monthly salary by 26 days, then the daily rate of wages becomes higher. What is your opinion?
Thank you.
From India, Mumbai
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For monthly paid employees, it is being divided by the No. days in the particular month. This practice is being followed in many companies. Pon
From India, Lucknow
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From India, Lucknow
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Dear Manish,
It's an interesting topic to discuss; I have worked in many industries, but everywhere the rule is to divide the monthly salary by 30 days, not 26 days. As per labor law, it's true that working for 6 days, the employee is entitled to 1 day off per week, but it's a paid holiday. Yes, but if you pay salary on a daily wage basis, you have to show the salary for 26 days. In my view, if an employee is getting a specified monthly salary, there is no such rule, but if it's on a daily wage basis, then it is calculated based on 26 days in a month. I think this topic has already been discussed in this forum. It's good that we discuss such issues in this forum because I believe every HR professional has somewhere in their career encountered such situations.
Best Regards
From India, Surat
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It's an interesting topic to discuss; I have worked in many industries, but everywhere the rule is to divide the monthly salary by 30 days, not 26 days. As per labor law, it's true that working for 6 days, the employee is entitled to 1 day off per week, but it's a paid holiday. Yes, but if you pay salary on a daily wage basis, you have to show the salary for 26 days. In my view, if an employee is getting a specified monthly salary, there is no such rule, but if it's on a daily wage basis, then it is calculated based on 26 days in a month. I think this topic has already been discussed in this forum. It's good that we discuss such issues in this forum because I believe every HR professional has somewhere in their career encountered such situations.
Best Regards
From India, Surat
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well what i have studied and wht’s been implemented in my organisation is that the salary is to be calculated from working days after leaving off-days.
From India, Chandigarh
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From India, Chandigarh
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Dear Manish,
Monthly salary to be divided by 30/26 is really confusing. This one varies from organization to organization. But I think if you pay more than the legal requirement, then there is no problem. In our organization, we calculate OT/Gratuity by dividing by 26 days; otherwise, it's 30 days.
For example, one employee's monthly salary/wage is 6000/- per month. In any month (30 days), if he worked 15 days, availed 2 days off with wage, and had 4 days off, then the total pay days are 21 days. Now, we calculate their salary by dividing by 30 days:
Paid salary = 6000 - (6000/30) * (30-21) = 6000 - 200 * 9 = 6000 - 1800 = 4200
Now dividing by 26 days:
Paid salary = 6000 - (6000/26) * (26-17) = 6000 - 230.76 * 9 = 6000 - 2077 = 3923
I think 4200 > 3929; of course, this is beneficial for the employee.
Thanks,
Manish
From India, Bangalore
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Monthly salary to be divided by 30/26 is really confusing. This one varies from organization to organization. But I think if you pay more than the legal requirement, then there is no problem. In our organization, we calculate OT/Gratuity by dividing by 26 days; otherwise, it's 30 days.
For example, one employee's monthly salary/wage is 6000/- per month. In any month (30 days), if he worked 15 days, availed 2 days off with wage, and had 4 days off, then the total pay days are 21 days. Now, we calculate their salary by dividing by 30 days:
Paid salary = 6000 - (6000/30) * (30-21) = 6000 - 200 * 9 = 6000 - 1800 = 4200
Now dividing by 26 days:
Paid salary = 6000 - (6000/26) * (26-17) = 6000 - 230.76 * 9 = 6000 - 2077 = 3923
I think 4200 > 3929; of course, this is beneficial for the employee.
Thanks,
Manish
From India, Bangalore
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It is common that for deciding daily wage, the monthly wage is divided by 30 irrespective of whether the month has 30, 31, or 28 days. However, for calculating gratuity, it is to be divided by 26 only. Similarly, for finding out the retrenchment compensation as per the Industrial Disputes Act, the salary is to be divided by 30.
Regards,
Madhu T.K
From India, Kannur
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Regards,
Madhu T.K
From India, Kannur
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Dear Manish,
Greetings for the day.
Yes, the labor inspector is correct. The monthly salary should be divided by 26 instead of 30, 31, 28, or 29. Take the example of the minimum wage in any state, and you will find that the average daily wage is calculated by basic + DA/26 instead of 30, 31, 28, or 29 days.
Thanks & Regards,
Sumit Kumar Saxena
9899669071, 0120-4131277
From India, Ghaziabad
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Greetings for the day.
Yes, the labor inspector is correct. The monthly salary should be divided by 26 instead of 30, 31, 28, or 29. Take the example of the minimum wage in any state, and you will find that the average daily wage is calculated by basic + DA/26 instead of 30, 31, 28, or 29 days.
Thanks & Regards,
Sumit Kumar Saxena
9899669071, 0120-4131277
From India, Ghaziabad
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Dear all,
Calculating the daily wage will differ from establishment to establishment depending upon the law applicable to it. Namely, whether it is the Factories Act, the Shops and Establishments Act, the Mines Act, the Plantation Labour Act, or the Motor Transport Workers Act. The only exception to this rule is the Payment of Gratuity Act, where it is provided that the monthly wage should be divided by 26 to obtain the daily wage.
Take, for example, the Factories Act. This Act states that the first day of the week shall be a holiday for the worker, meaning the worker should have a weekly off day. However, the Factories Act does not specify that the weekly off should be a paid holiday. Therefore, if the employer wants to calculate the daily wages, they have to divide the monthly wage by 26.
Considering the Tamil Nadu Shops and Establishments Act, this Act mandates that every shop or establishment should be closed for a day in a week. Furthermore, it specifies that no deduction should be made from the wages of any employed person in a shop/establishment for any day or part of a day on which a holiday has been allowed under the Act. This implies that for a monthly-paid employee in a shop or establishment to determine their daily wage, their monthly wage should be divided by 30/31. In the case of a daily-paid employee, they should be compensated for the days on which the shop remains closed.
The provisions of the Plantation Labour Act are similar to the Factories Act. This Act also provides for a rest day every seven days for all workers but does not mandate payment for the rest day. Sometimes, in agreements reached for Factories and Plantation work, a weekly off with wages may be provided. In such cases, to calculate the daily wage, the monthly wage should be divided by 30.
When the Government sets minimum wages for any scheduled employment under the Minimum Wages Act and specifies that wages must be paid for weekly holidays, the monthly wage should be divided by 30 to determine the daily wage.
Under the Industrial Disputes Act, retrenchment compensation is calculated as "fifteen days average pay for every completed year of continuous service in excess of six months." The term "average pay" is defined under section 2(aaa). Based on this definition, the "average pay" must be calculated to compute the retrenchment compensation.
With regards,
From India, Madras
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Calculating the daily wage will differ from establishment to establishment depending upon the law applicable to it. Namely, whether it is the Factories Act, the Shops and Establishments Act, the Mines Act, the Plantation Labour Act, or the Motor Transport Workers Act. The only exception to this rule is the Payment of Gratuity Act, where it is provided that the monthly wage should be divided by 26 to obtain the daily wage.
Take, for example, the Factories Act. This Act states that the first day of the week shall be a holiday for the worker, meaning the worker should have a weekly off day. However, the Factories Act does not specify that the weekly off should be a paid holiday. Therefore, if the employer wants to calculate the daily wages, they have to divide the monthly wage by 26.
Considering the Tamil Nadu Shops and Establishments Act, this Act mandates that every shop or establishment should be closed for a day in a week. Furthermore, it specifies that no deduction should be made from the wages of any employed person in a shop/establishment for any day or part of a day on which a holiday has been allowed under the Act. This implies that for a monthly-paid employee in a shop or establishment to determine their daily wage, their monthly wage should be divided by 30/31. In the case of a daily-paid employee, they should be compensated for the days on which the shop remains closed.
The provisions of the Plantation Labour Act are similar to the Factories Act. This Act also provides for a rest day every seven days for all workers but does not mandate payment for the rest day. Sometimes, in agreements reached for Factories and Plantation work, a weekly off with wages may be provided. In such cases, to calculate the daily wage, the monthly wage should be divided by 30.
When the Government sets minimum wages for any scheduled employment under the Minimum Wages Act and specifies that wages must be paid for weekly holidays, the monthly wage should be divided by 30 to determine the daily wage.
Under the Industrial Disputes Act, retrenchment compensation is calculated as "fifteen days average pay for every completed year of continuous service in excess of six months." The term "average pay" is defined under section 2(aaa). Based on this definition, the "average pay" must be calculated to compute the retrenchment compensation.
With regards,
From India, Madras
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I totally agree with V.harikrishnan sir With regards sarvesh shukla HR Executive Sodexo india
From India, Gurgaon
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From India, Gurgaon
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Dear Manish and others,
Are you paying as per Minimum Wages notified? In that case, the monthly wages are a multiple of 26. Indeed, every day's wage is the wage for 1 and 1/6 day's wages so that at the end of the sixth day, the wages of 7 days are made up. Therefore, you don't have to pay for the weekly off day. In fact, if you divide the monthly minimum wages by 26, you will get the daily wage rate.
In other cases where you pay an amount higher than minimum wages, the daily wages could be computed by dividing by the number of working days in that month. For example, if someone is absent for 5 days without pay, the deduction would be the monthly wages divided by the number of days in the wage month multiplied by 5, the number of days of absence. Harikrishnan has already elaborated on the other aspects.
Regards,
KK
From India, Bhopal
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Are you paying as per Minimum Wages notified? In that case, the monthly wages are a multiple of 26. Indeed, every day's wage is the wage for 1 and 1/6 day's wages so that at the end of the sixth day, the wages of 7 days are made up. Therefore, you don't have to pay for the weekly off day. In fact, if you divide the monthly minimum wages by 26, you will get the daily wage rate.
In other cases where you pay an amount higher than minimum wages, the daily wages could be computed by dividing by the number of working days in that month. For example, if someone is absent for 5 days without pay, the deduction would be the monthly wages divided by the number of days in the wage month multiplied by 5, the number of days of absence. Harikrishnan has already elaborated on the other aspects.
Regards,
KK
From India, Bhopal
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(Fact Checked)-The user reply contains accurate information regarding the calculation of daily wages based on different labor laws such as the Factories Act, Shops and Establishments Act, and others. The explanation provided aligns with the legal provisions mentioned. (1 Acknowledge point)