The first day of every month is a happy day for employees, as they receive their hard-earned incomes from their employers. For employers, though, this day is torturous as it brings with it the tedious calculation of salaries. Well, we’re here for you, employers! In this post, we’ll be discussing how to calculate salary in just a few minutes. We’ll be using an excel sheet to do our calculations.
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How To Calculate Monthly Salary Formulae
There are three ways to calculate your monthly salary:
- Daily Wage Method
- Working Days Method
- Total Days Method
Calculating monthly salary? Learn about Decoding your salary slip in detail.
Daily Wage Method:
This is the most common method for daily wage workers. There are two methods here to calculate this:
- Method A: Monthly Gross Salary = (Net Daily Wage) * (Present Days)
- Method B: Monthly Gross Salary = (Net Daily Wage) * (Present Days + Weekly Holidays)
Either of these two methods can be used to calculate the salary depending on the employer’s preference.
Working Days Method:
This is the most recommended method to calculate the salary of workers.
Monthly Gross Salary = {Net Salary * (Present Days + Paid Leave)} Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â (Total Working Days)
Also learn about Payment of Bonus Act and amendments | Analysis of 2015 amendments.
Total Days Method:
This is another common method to calculate the salary of workers.
Monthly Gross Salary = {Net Salary * (Present Days + Paid Leave + Weekly Holidays + Festival Leaves)} (Total Days in a Month)
[ S = N * (Present + PL + W + F) / Total ]
Now we’ll illustrate monthly salary calculation with an example:
For the first two methods, we’ve assumed the salary of the employee to be received if he worked all the days was INR 10,000. For the daily wage method, we’ve taken daily wages to be INR 400.
Also, we’re assuming that only Sundays are holidays for the company. Depending on the weekly holidays decided by your company, you may edit that.
| Method | Salary | Total Days | Work Days | Present + PL | F | W | Gross Salary |
| TDM | 10000 | 31 | 27 | 26 | 0 | 4 | 9677 |
| WDM | 10000 | 31 | 27 | 26 | 0 | 4 | 9630 |
| DWM A | 400 | 31 | NA | 22 | 0 | 0 | 8800 |
| DWM B | 400 | 31 | NA | 22 | 0 | 3 | 10000 |
For TDM: The sum of (Present + PL + F + W) is 30, while the total days in a month is 31. Hence, the net salary is 30/31th of the INR 10,000.
For WDM: The sum of (Present + PL) is 26, while the total working days are 27. Hence, the net salary is 26/27th of the INR 10,000.
For DWM A: The number of days present is 22, so net salary is 22 * Daily wages, which is INR 8,800.
For DWM B: The sum of (Present + W) is 25, so net salary is 25 * Daily Wages, which is INR 10,000.
Still confused? Check out this video by the Labour Law Advisor on YouTube:
We genuinely hope you have learned something new from our blog, and stay tuned for more informative blog posts. Have a decent job? Learn about Income Tax Return Filing For Salaried Persons and its Online Process
P.I. Jain and Company serve more than 500 companies across India and helping them with their payroll processing needs and EPF consultancy.
