Insights on Salary Calculation, Working Days, and Gratuity: Varied Perspectives Discussed

Can anybody tell me, what's the basis for computing salary on 26 days or working days?

Regards,
Shweta

Dear Shweta,

Universally, Sundays are considered holidays. So, in a month, all other days are working days. Most months will have only four Sundays. But the worst-case scenario is when a month has five Sundays since more than five is not possible. Therefore, the number of working days should be the worst-case total number of days in a month minus the worst-case number of Sundays. That will be 31-5, which is equal to 26. On pro-employee/humanitarian grounds, facts such as there are more 30-day months than 31-day months, as well as the 28/29 days in the month of February, are ignored.

I'm guessing that in a year, one gets 26 working days as leave based on the same logic.

Hope that helps.

Regards,
Mathew.

Hi all,

In my opinion, salary is never calculated on the basis of 26 days; it is always on the basis of 30 days. However, it's gratuity that is calculated on the basis of 26 days.

Regards

Hi Shwetha,

This is Hemalatha, an HR consultant. Basically, it depends on the nature of the organization. Factories generally work on the actual working days concept or fixed days (i.e. 30 days). The logic is to conform to ESI rules and regulations.

If you notice, leave encashment is based on 30 days, and the bonus is also based on 30 days; hence, this can be the criteria. Where there are specific union agreements to prorate salary based on actual working days during the month (where the employee will get a higher salary), it is suggested to have 26 or actual workdays as basic.

Hema

As Hema mentioned, I presume it works based on the type and nature of the industry. In an organization that is based in a factory with trade unions, etc., it would be right.

Can anybody shed light on how it works in the software industry?

Hi,

Among all the emails that you have received regarding your question, Mr. Saurabh Kalra has hit the bull's eye with his answer: "The calculation is the basis for GRATUITY!" Absolutely right! 100%

Best Regards,
Sadashiv Rao :)

Hi Shweta,

The main basis for the calculation of salary for 26 days is used for the calculation of Gratuity. I am sure that you must be aware of Gratuity. The organization has to pay gratuity to the employee once he/she completes 5 years of service and is leaving the organization. This is where the calculation of 26 days comes into the picture (30 days - the Sundays). Hope this information is of use to you.

Regards,
Sadashiv :)

Hello!

Apart from gratuity calculation, some companies have started calculating other benefits like leave encashment with a 26-day base, which benefits the employee.

Best Wishes,
Learner

Hi,

I am still not clear about the concept of calculating salary based on 26 days or 30 days. My company is involved in diversified businesses such as construction, IT, film financing, etc., and we calculate salary on a 30-day basis. I would like to understand the correct method of calculating salary. Please help me as I am really confused.

Regards,
Preeti

Dear All,

The basic concept of 26 days came from the fact that there are not more than 4 weeks in a month, and you need to give one holiday for every week. This was done with the view to increase the wage rate of weekly and daily waged workers.

The above has been made prevalent by The Minimum Wages Act, which when bringing out the minimum wages for a period of 6 months clearly states that you need to divide the monthly wage by 26 to arrive at the daily wage.

As for monthly-paid employees, this whole concept of 26 days and 30 days does not take place unless you are deducting from salary due to absence from duty. This must also be clearly stated and informed (the number of days the company would take i.e. 26 or 30).

Regards,
SC