How to calculate salary from attendance in India

Why salary should come from attendance

Most disputes about salary in small businesses come down to one question: how many days was this person paid for? If you count days from a paper register or memory at the end of the month, small errors creep in and staff lose trust. Calculating salary directly from a daily attendance record makes every rupee traceable to a day.

Step 1: Decide how to calculate per-day salary

For staff on a monthly salary, Indian businesses commonly use one of three methods:

• Days in the month. Monthly salary ÷ 28, 29, 30 or 31, depending on the month. Each day is worth slightly less in a 31-day month. This is the most precise method.
• Fixed 30 days. Monthly salary ÷ 30, every month. Easy to explain: each day is always the same amount.
• Fixed 26 days. Monthly salary ÷ 26, treating the four weekly offs as unpaid days that are already built into the salary. Common in factories and shops with six-day weeks.

None of these is wrong, but mixing them causes confusion. Pick one, mention it in the appointment letter or salary policy, and apply it to everyone on monthly pay.

Step 2: Count paid days

Go through each day of the month and decide whether it is paid:

The days that are not paid are your loss of pay (LOP) days. Show them on the payslip so the person can see why their salary is lower.

Step 3: Work out the salary

Take an employee on ₹30,000 a month in October (31 days). In October they were:

• present on 23 days,
• on paid casual leave for 1 day,
• off on 1 holiday (Gandhi Jayanti) and 4 Sundays,
• absent on 2 days.

Paid days = 23 + 1 + 1 + 4 = 29. LOP = 2. Here is the salary under each method:

The difference between methods is a few hundred rupees here, which is exactly why it matters to agree on one method in advance.

Half days

A half day counts as half a paid day. Decide in your attendance policy how many hours make a full day and a half day. For example: 8 hours or more is a full day, 4 to 8 hours is a half day, and under 4 hours is absent. Then mark each day by the hours actually worked, not by guesswork.

Overtime

Overtime is usually paid per hour at a multiple of the ordinary hourly rate. Work out the hourly rate from the per-day salary and the length of the shift:

For factory workers, the Factories Act, 1948 requires overtime at twice the ordinary rate. For shops and offices, your state’s Shops and Establishments Act sets the rules, so check what applies to you.

Daily-wage and hourly staff

For staff paid by the day, multiply the daily rate by the days worked (and paid leave, if you give it); weekly offs and holidays are usually not paid unless you have agreed otherwise. For hourly staff, multiply the hourly rate by the hours on the attendance record.

Late arrivals

Many businesses allow a grace period (for example, 10 minutes) and then treat repeated lateness as a half day, for example every third late arrival in a month. Whatever rule you choose, put it in writing and tell staff before you apply it. Deductions from wages are regulated by the Payment of Wages Act and state laws, so keep them reasonable and documented.

After the gross salary

The amount above is the gross salary earned. From it, deduct any statutory contributions (PF, ESI, Professional Tax and TDS where they apply) and recoveries such as salary advances. Read our guides on PF and ESI calculation and Professional Tax slabs by state.

Checklist for every month

1. Close the attendance for the month and correct any wrong days.
2. Check approved leave and holidays are marked.
3. Count paid days and LOP for each person.
4. Apply your per-day method, half days, overtime and late rules.
5. Deduct statutory contributions and advances.
6. Give each person a payslip that shows paid days and every line. See what a salary slip should include.

Published 4 November 2026 by the StaffPrime team. General information only, not legal or tax advice.