Hi All
I am working in corporate office, here we are calculating salary in gross. [example : if an employee takes 2 days leave, we will deduct from his gross salary [gross salary / 30 * 28 days]
One of my friend working in a factory, there they are deducting from Basic+DA only not in gross like HRA & Con [Example: if an employee takes 2 days leave they will deduct 2 days salary from his Basic+DA not in HRA & Conveyance]
In this regard I would like to know its is correct or wrong. Kindly give instruction.
Regards
Kanaka
From India, Madras
12I am working in corporate office, here we are calculating salary in gross. [example : if an employee takes 2 days leave, we will deduct from his gross salary [gross salary / 30 * 28 days]
One of my friend working in a factory, there they are deducting from Basic+DA only not in gross like HRA & Con [Example: if an employee takes 2 days leave they will deduct 2 days salary from his Basic+DA not in HRA & Conveyance]
In this regard I would like to know its is correct or wrong. Kindly give instruction.
Regards
Kanaka
From India, Madras
Dear Kanaka,
The deduction should be done on Gross Salary only and the formula is as follows:
Gross Salary/26 (Four days weekly off)*No. of days present.
As for your friend's case let me tell you I feel they are doing the same thing you people are doing because usually almost all allowances are connected to attendance in a Factory. For example you have Canteen Allowance of Rs. 15/-(say). A person absents himself for two days, hence his canteen allowance will be = 15 X 24 = 360. Now when you are deducting his wage for the absence you need not go in for the Gross Wage method because you have already not paid the same. Hence Basic +DA is deducted in some cases.
Hope I have been able to clarify myself.
Warm Regards,
SC
From India, Thane
The deduction should be done on Gross Salary only and the formula is as follows:
Gross Salary/26 (Four days weekly off)*No. of days present.
As for your friend's case let me tell you I feel they are doing the same thing you people are doing because usually almost all allowances are connected to attendance in a Factory. For example you have Canteen Allowance of Rs. 15/-(say). A person absents himself for two days, hence his canteen allowance will be = 15 X 24 = 360. Now when you are deducting his wage for the absence you need not go in for the Gross Wage method because you have already not paid the same. Hence Basic +DA is deducted in some cases.
Hope I have been able to clarify myself.
Warm Regards,
SC
From India, Thane
Dear Kanaka
You both are right. There is three types of employments namely
Daily Rated
Monthly Rated
and Contract Rated
It is clear that 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 in case of LWP 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 for LWP , 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. Under any if you are violation is 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.
Hence both the methods are correct and these are not violating any legal provisions. This question of correct basis has been taken to courts a number of time. Judges are also of the view that this should be of 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.
Regards
Anil Anand
From India, New Delhi
You both are right. There is three types of employments namely
Daily Rated
Monthly Rated
and Contract Rated
It is clear that 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 in case of LWP 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 for LWP , 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. Under any if you are violation is 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.
Hence both the methods are correct and these are not violating any legal provisions. This question of correct basis has been taken to courts a number of time. Judges are also of the view that this should be of 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.
Regards
Anil Anand
From India, New Delhi
Dear Anil Anand,
We usually follow 26 days because
(i)there is no holiday as such under Factories Act.
(ii) Usually employees who absents from his/her duties get penalised as a higher wage cut takes place when we replace 30 with 26 days.
(iii) The employees have a higher rate of pay as a result get higher benefits.
(iv) We calculate the Minimum Wages for our Contract Labour by dividing with 26 and not by the number of days of the month!! The circular that comes out from the Labour Secretariat every six month regarding rate of pay under Minimum Wages also states the same.
Warm Regards,
SC
From India, Thane
We usually follow 26 days because
(i)there is no holiday as such under Factories Act.
(ii) Usually employees who absents from his/her duties get penalised as a higher wage cut takes place when we replace 30 with 26 days.
(iii) The employees have a higher rate of pay as a result get higher benefits.
(iv) We calculate the Minimum Wages for our Contract Labour by dividing with 26 and not by the number of days of the month!! The circular that comes out from the Labour Secretariat every six month regarding rate of pay under Minimum Wages also states the same.
Warm Regards,
SC
From India, Thane
Dear Kanaka,
All salaries/wages are calculated on the basis of days worked and not on the basis of days absence.
Let me elucidate:
If a person comes for 20 days, we calculate as follows:
(i)Basic + DA for the total number of days attended (In case of Absenteeism). The rate of BASIC+DA is done by (Monthly Basic+DA)/26
(ii) Add: Allowances and other Payment depending on BASIC. For example if you pay HRA @ 15% of Basic pay as per (i)
(iii) Multiply other Daily allowances like Conveyance, Tiffin ect. with the total number of days present (in this case 20).
Hence as per above if the Wage comes to 2000 for 20 days.
His HRA would be 15% of 2000
His Conveyance (20/- per day=say) = 20 * 20 = 400.
I hope i have cleared your queries.
Warm Regards,
SC
From India, Thane
All salaries/wages are calculated on the basis of days worked and not on the basis of days absence.
Let me elucidate:
If a person comes for 20 days, we calculate as follows:
(i)Basic + DA for the total number of days attended (In case of Absenteeism). The rate of BASIC+DA is done by (Monthly Basic+DA)/26
(ii) Add: Allowances and other Payment depending on BASIC. For example if you pay HRA @ 15% of Basic pay as per (i)
(iii) Multiply other Daily allowances like Conveyance, Tiffin ect. with the total number of days present (in this case 20).
Hence as per above if the Wage comes to 2000 for 20 days.
His HRA would be 15% of 2000
His Conveyance (20/- per day=say) = 20 * 20 = 400.
I hope i have cleared your queries.
Warm Regards,
SC
From India, Thane
Hi Kanaka,
w.r.t. your query i would like to tel you about the the present industry trends / work procedures . The deduction in salary for abseenteesim is always made on the gross salary and not just only on basic+da.
From India, Bangalore
w.r.t. your query i would like to tel you about the the present industry trends / work procedures . The deduction in salary for abseenteesim is always made on the gross salary and not just only on basic+da.
From India, Bangalore
hi,
can anyone plz tell me how the basic and HRA of an employee decided? i was told to prepare a break up of an employee and was told that prepare it in such a way that his take home shud be 35000/-, i also wanna know what are the rule for getting registered for PF?
can anyone plz tell me how the basic and HRA of an employee decided? i was told to prepare a break up of an employee and was told that prepare it in such a way that his take home shud be 35000/-, i also wanna know what are the rule for getting registered for PF?
Dear Experts,
I have doubt. Till now in my experience we are considering 30 / 31 / 28 days as the basis for salary computation. Where as the actual wage should be 26 days only. even we calculate gratuity for 26 base only.
then my doubt is that while calculating..the lop and net salary which method should be followed and any rule / act to refer as under:
1. Earned Salary = Actual Gross / No. of total days in a month * Actual working days.
or
2. Earned Salary = Actual Gross / 26 * Actual Working Days.
which is the correct Method ? I have been asked by the management that when we are paying for 26 days (gratuity), why cannot we calculate for 26 days for payroll also instead of 30 / 31 days ...?
please clafify.
balaram
From India, Visakhapatnam
I have doubt. Till now in my experience we are considering 30 / 31 / 28 days as the basis for salary computation. Where as the actual wage should be 26 days only. even we calculate gratuity for 26 base only.
then my doubt is that while calculating..the lop and net salary which method should be followed and any rule / act to refer as under:
1. Earned Salary = Actual Gross / No. of total days in a month * Actual working days.
or
2. Earned Salary = Actual Gross / 26 * Actual Working Days.
which is the correct Method ? I have been asked by the management that when we are paying for 26 days (gratuity), why cannot we calculate for 26 days for payroll also instead of 30 / 31 days ...?
please clafify.
balaram
From India, Visakhapatnam
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SALARY SHEET CALCULATION.xls
Salary calculation.doc