How to Calculate Salary from Attendance (with Overtime)

Salary from attendance is simple once you fix three things: how many days you divide the monthly salary by, which days are paid, and the overtime rate. Write these into your policy so every month is calculated the same way.

The basic formula

Earned salary = monthly salary ÷ divisor days × payable days

• Divisor days: many companies use the actual days in the month (28 to 31). Others use a fixed 30 or 26. Pick one and use it every month.
• Payable days: present days + paid leave + weekly offs + paid holidays.

Example: monthly salary ₹18,000, October has 31 days, the employee was absent 2 days. Payable days = 29. Earned salary = 18,000 ÷ 31 × 29 = ₹16,839.

Half days and late marks

A half day usually counts as 0.5 present and 0.5 absent. Some companies convert three late marks into a half day; if you do, write it in the policy and mark HD on the third late day.

Weekly offs and holidays

Weekly offs and declared holidays are normally paid. If an employee is absent on the days just before and after a holiday, some policies treat the holiday as unpaid too; follow your written policy and state rules.

Overtime pay

Overtime is work beyond normal hours. Under the Factories Act, overtime is paid at twice the ordinary rate of wages. Shops and establishments follow state rules, which are often similar.

Hourly rate = monthly salary ÷ divisor days ÷ working hours per day
OT pay = hourly rate × OT rate × OT hours

Example: ₹18,000 ÷ 31 ÷ 8 = ₹72.58 per hour. 10 OT hours at 2× = 72.58 × 2 × 10 = ₹1,452.

Gross pay and deductions

Gross pay = earned salary + OT pay (+ any allowances). Deductions such as PF (employee 12% of basic), ESI where applicable and professional tax come after this and depend on your salary structure.

Mistakes to avoid

• Using 26 days one month and 31 the next.
• Not recording OT hours daily, then guessing at month end.
• Paying for absent days because attendance was not marked.
• Keeping attendance on loose paper that gets lost before salary day.

Keep records for inspections

Labour inspectors and auditors can ask for attendance and wage registers. Keep the monthly register, the overtime record and the salary paid for each employee for the years your state rules require, signed or approved by the person in charge.

A ready register

Our Employee Attendance, Overtime & Salary Register has 31 daily drop-downs and works out present days, earned salary, OT pay and gross pay for every employee, with a department summary.