The pay cycle in payroll refers to the period for which salaries are processed. Different organizations choose pay cycles based on their needs, such as 1st to 30th, 26th to 25th, or 20th to 19th of the month.
When a salary revision takes effect in the middle of a pay cycle, the employee’s salary is calculated using the old salary for the period before the revision date and the new salary for the period after it.
For example, let’s consider an organization with a pay cycle from the 20th to the 19th. An employee receives a salary revision effective from April 1. The old gross salary is ₹30,000, and the new gross salary is ₹35,000.
The calculation for April will be:
Salary from March 20 to March 31 = (30,000 × 12) / 31 = ₹11,612.9
Salary from April 1 to April 19 = (35,000 × 19) / 31 = ₹21,451.6
Total salary for April = ₹11,612.9 + ₹21,451.6 = ₹33,064.5
This is how salary is calculated when a revision occurs in the middle of the pay cycle
Comments
0 comments
Please sign in to leave a comment.