Previously, companies had limited options for calculating the daily rate, which affected how employees' salary proration, leave encashment, and unpaid leave deduction amounts were determined. However, we have now introduced a new Daily Wage calculator that offers more flexibility and customization options for users.
With the new calculator, you can select from different calculation bases, such as calendar days, working days, or custom days which allows for greater control over how salaries are calculated. In addition, you can choose which components of the salary should be factored into these calculations, such as basic salary, basic salary plus allowances, or allowances only.
You can access the Daily Wage Calculator from Configurations → Payroll → Daily Wage Calculation.
The Daily Wage Calculation impacts three main areas which are, Salary proration, Leave encashment, and Unpaid leave deduction.
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Distinction Between Working Days, Calendar Days, and Custom Days
Superadmin, Payroll table managers, or a transaction processor can select the calculation base for a daily wage from between calendar days, working days, or custom days.
Calendar days: the number of days in a given month. For example, the calendar days in January will be 31 whereas in February it will be 28.
Working days: only business days are counted. Weekends and public holidays (those set up on your company's public holiday calendar) do not count in the calculation.
Custom days: give Payroll table managers the flexibility of setting the calculation base according to your company policies.
Most companies in UAE and KSA set the custom days as 30 which allows them to calculate daily wages in accordance with the labor law which states that a month is only considered to be 30 days.