Three ways to work out a day’s pay
Everything else follows from one number: what a day of this person’s time is worth. There are three common ways to get it, and they give different answers in different months:
| Method | February 2026 (28 days) | March 2026 (31 days) | Worked out as |
|---|---|---|---|
| Days in that month | ₹642.86 | ₹580.65 | ₹18,000 ÷ days in the month |
| A fixed 30 days | ₹600.00 | ₹600.00 | ₹18,000 ÷ 30 |
| 26 working days | ₹692.31 | ₹692.31 | ₹18,000 ÷ 26 |
- Days in that month. A day off costs the same share of the month in February as in March, and a full month present is always the full salary. Weekly offs are paid without any extra rule.
- A fixed 30. Simple and the same every month — but then decide whether you pay “days worked × rate” or “salary − days absent × rate”, because in a 31-day month the two differ by a whole day’s pay.
- 26 working days. Treats the monthly salary as covering about 26 working days plus the weekly offs, so each absent day costs more. The central model rules under the Code on Wages use 26 to turn a daily minimum wage into a monthly one, and treat a day’s pay worked out by dividing by 26 as already covering the weekly rest day.
The Code on Wages, 2019 leaves the manner of calculating wages to the rules of the “appropriate government” — for a private hotel, restaurant or shop, that is your state, so check your state’s rules. What the Code itself fixes is a ceiling: a deduction for absence cannot be larger, as a share of the wages, than the time absent is as a share of the time the person was required to work in that wage period (section 20). Dividing by the days in the month always stays within that ceiling, because nobody is required to work more days than the month has. Dividing by 26 can go past it for someone required to work 27 days in a long month.
Which days are paid
| Day | Paid? | Notes |
|---|---|---|
| Present | Yes | A full day |
| Half day | Half | Half present and half absent — never rounded either way |
| Weekly off | Usually, for monthly-salaried staff | Say so in the appointment letter |
| Paid holiday | Yes | The holidays your state’s law and your policy give |
| Paid leave from an allowance | Yes | Until the allowance runs out |
| Absent, or unpaid leave | No | Deducted at the day’s pay |
If weekly offs and holidays are paid, the simplest correct method is to start from the full salary and deduct only the unpaid absences — the paid days then need no arithmetic at all.
A worked month: half days, an absence and an advance
Ravi, housekeeping — July 2026, 31 days
Monthly salary ₹15,500. July: present 24 days, 4 paid weekly offs, 2 half days, 1 day absent. He is repaying an advance at ₹3,000 this month.
On a fixed 30 the absence would cost ₹1,033.33, and on 26 days ₹1,192.31 — which is why the divisor has to be written down before the first argument about it, not after.
Advances: in writing, and back on a schedule
- Write every advance down the day it is handed over: date, amount, who, and how it will be repaid.
- Book it as money going out that day. It is not a salary expense — it comes back off a payslip later.
- Recover it in instalments the person agreed to, and show each instalment on the payslip.
- Never take so much in one month that the pay left is unlivable — and never more than the law allows (below).
The Code on Wages caps all deductions in a wage period — absence, advances, fines and the rest together — at 50% of the wages. The central model rules say any excess is carried forward to later months in instalments, each within that 50%.
Worked example
A cook earning ₹18,000 takes a ₹12,000 advance before Diwali. Recovering it at ₹4,000 a month clears it in 3 months and keeps each month’s deduction at 22.2% of the salary — comfortably inside the 50% limit, even with a day or two of absence in the same month.
Overtime
The Code on Wages says overtime is paid at not less than twice the normal rate of wages, and the Occupational Safety, Health and Working Conditions Code sets the normal limit at eight hours a day and six days a week for establishments it covers (those with ten or more workers).
Worked example
Ravi’s day is worth ₹500 for an eight-hour day, so an hour is ₹62.50. 3 hours of overtime at twice that rate: 3 × ₹125 = ₹375.
The payslip
The Code on Wages requires every employer to issue wage slips, in the form and manner the rules prescribe; the central model (Form V) can be electronic or on paper and is given on or before payday. Whatever your state’s form, a payslip that answers the usual questions shows:
- Name, role and the month
- Days in the month, days paid, absences and half days
- The day’s pay and how it was worked out
- Gross pay, overtime, and each deduction on its own line (absence, advance, PF and ESI where they apply)
- Net pay, the date paid and how (cash, UPI, bank)
Once a month is paid, freeze its payslip. If an attendance mistake is found later, correct it in the next month’s pay with a line that says so — never by quietly rewriting a slip that was already paid.
The rules you cannot ignore
India’s four Labour Codes came into force on 21 November 2025. The Code on Wages, 2019 replaced the Payment of Wages Act, the Minimum Wages Act, the Payment of Bonus Act and the Equal Remuneration Act. For a private hotel, restaurant or shop the detailed rules are your state’s; where this guide cites the central rules, treat them as the model.
| Rule | What it says | Where |
|---|---|---|
| Wage period | No longer than a month | Code on Wages, s.16 |
| When to pay a monthly wage | Before the end of the 7th day of the following month | s.17(1) |
| When someone leaves | Within two working days of resignation, removal or dismissal | s.17(2) |
| Deductions | Only those the Code lists (absence, advances, fines, damage, PF/ESI, tax…); all together at most 50% of wages | s.18 |
| Absence | No more than in proportion to the time absent against the time required to work | s.20 |
| Fines | At most 3% of the wage period’s wages | s.19 |
| Overtime | At least twice the normal rate | s.14 |
| Wage slips | Every employer must issue them | s.50(3) |
| Minimum wage | Fixed by your state (and never below the Centre’s floor wage) | s.9; your state’s notification |
PF and ESI, as of 25 September 2026
- EPF applies to an establishment with 20 or more employees (smaller ones may join voluntarily). The wage ceiling became ₹25,000 a month on 17 September 2026 (it was ₹15,000). The employer pays 12% of wages up to the ceiling and the employee an equal share (10% for classes of establishment the Centre notifies).
- ESI applies to an establishment with 10 or more persons, once ESIC has notified its area. The wage ceiling is ₹21,000 a month (₹25,000 for a person with disability); the employer pays 3.25% and the employee 0.75%.
Professional tax, where your state levies it, and income-tax deducted at source on higher salaries are separate again — ask your accountant which apply to you.
Common mistakes
- Rounding a half day up or down instead of counting it as half.
- Using 30 one month and the calendar the next, so the same absence costs different amounts.
- Taking a large advance back in one month, above what the person agreed or the 50% limit allows.
- Paying in cash with no record of the date, the amount and who received it.
- Recalculating a month that was already paid, so the payslip and the money disagree.
- Not marking weekly offs at all — then nobody can show later that they were paid.
To try the sums with your own numbers, use the free salary calculator.