Payroll Settings control how salaries are calculated in every pay run — the per-day rate method, pro-rata vs deduction style, attendance linkage, holiday treatment during unpaid leave, and payslip display. Configure these once; every Pay Run uses them when computing earnings and LOP deductions.
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These settings apply workspace-wide. When you create or recalculate a pay run, the engine reads them to determine:
- How many days to divide monthly salary by (the divisor)
- Whether LOP reduces earnings directly (pro-rata) or appears as separate deduction lines
- Whether attendance auto-fills present days, LOP, holidays, and OT
- How holidays inside an unpaid-leave stretch are treated
For production wages and piece-rate settings, see Payroll Settings (overview).
After all earning, deduction, and reimbursement lines are built, net pay for each employee is:
Net pay = Payment total − Deduction total + Expense total (+ round-off)| **Component** | **Typical sources** | |---------------|---------------------| | Payment total | Basic, HRA, allowances, OT (category 7), production wages (6), leave salary (8), extra pay | | Deduction total | Cash advance (1), deduction on expense (2), LOP (3) | | Expense total | Approved Expense Claims (category 5) | | Round-off | Client rounding on the final net amount |
On pay-run approve, the journal posts salary payable (account 57), reimbursement payable (62), and employee receivable (14) per line. Amounts round to 2 decimals in most regions; Oman and Bahrain journal postings use 3 decimals.
Core formula (pro-rata, full month):
Per-day rate = Monthly amount ÷ divisorDays Earned amount = Per-day rate × effectivePaidDays
Core formula (deduction mode, full month):
Full amount = Monthly amount (for LOP-affected lines) LOP deduction = Monthly amount ÷ divisorDays × unpaidDays Net for line = Full amount − LOP deduction
All line amounts are rounded to 2 decimal places.
This setting (salaryCalculationBasis) defines divisorDays — how many days the monthly salary is spread over.
noOfDays = pay period end − start + 1 noOfHolidays = holidays in period (from attendance or Holiday master) noOfWorkingDays = noOfDays − noOfHolidays − holidayOvertimeDays divisorDays = noOfWorkingDays noOfPaidDays = noOfPresentDays = noOfWorkingDays − noOfLOPDays
Example: June has 30 calendar days, 5 holidays → working days = 25. Basic ₹30,000 → per-day rate = 30,000 ÷ 25 = ₹1,200/day. Employee present 23 days (2 LOP) → Basic earned = 23 × 1,200 = ₹27,600.
divisorDays = fixedSalaryDays (e.g. 30 — set in Fixed Days for Salary Calculation) noOfPaidDays = fixedSalaryDays − noOfLOPDays
Example: Basic ₹30,000, fixed days = 30, LOP = 2 → paid days = 28 → Basic = 28 × (30,000 ÷ 30) = ₹28,000. Holidays do not change the divisor; only LOP reduces paid days.
divisorDays = noOfCalendarDays (= length of pay period in days) noOfPaidDays = noOfCalendarDays − noOfLOPDays
Example: Pay period 1 Jun–30 Jun (30 days), LOP = 2 → paid days = 28 → Basic ₹30,000 earned = 28 × (30,000 ÷ 30) = ₹28,000.
When an employee joins mid-period, salary is prorated:
Proration factor = noOfDaysInPeriod ÷ noOfDaysInMonth| **Mid-Month Joiner Proration Divisor** | **noOfDaysInMonth** | |----------------------------------------|---------------------| | Calendar Days in Month (default) | Actual days in the calendar month (e.g. 31 for May) | | Fixed Salary Days |
fixedSalaryDays (e.g. 30) — only when basis is Fixed Days |
Example: Employee joins 16 Jun (15 days in period). Basic ₹30,000. Proration = 15 ÷ 30 = 0.5 → base for period = ₹15,000 before LOP adjustment.
LOP-affected payment lines are reduced directly in the earnings section. The payslip shows a lower Basic/HRA amount.
For each LOP-affected monthly component:
effectivePaidDays = noOfPaidDays (if isPaidLeaveAffected = true)
= noOfPaidDays − noOfPaidLeaves (if isPaidLeaveAffected = false)
Earned = round((noOfDays ÷ noOfDaysInMonth) × (effectivePaidDays ÷ divisorDays) × monthlyAmount, 2)
Full-month shortcut:
Earned = round((effectivePaidDays ÷ divisorDays) × monthlyAmount, 2)
LOP-affected lines show the full (prorated) salary in earnings, then add separate Loss of Pay deduction lines (deduction category 3) for unpaid days.
unpaidDays = noOfLOPDays (if isPaidLeaveAffected = true)
= noOfLOPDays + noOfPaidLeaves (if isPaidLeaveAffected = false)
LOP deduction = round((noOfDays ÷ noOfDaysInMonth) × (unpaidDays ÷ divisorDays) × monthlyAmount, 2)
For a full month, both styles produce the same net pay. The difference is how the payslip reads:
| **Aspect** | **Pro-Rata** | **Deduction Mode** | |------------|--------------|-------------------| | Earnings section | Shows reduced Basic/HRA (e.g. ₹27,600) | Shows full Basic/HRA (e.g. ₹30,000) | | Deductions section | No LOP line for salary components | Explicit LOP line (e.g. ₹2,400, category Loss of Pay) | | Net pay | Same | Same | | Best for | Compact payslips | Audit trails and employee clarity on unpaid days |Each component in Salary Configuration links to a Payment Category with flags:
| **Flag** | **Effect** | |----------|------------| | LOP Affected | Reduced when employee has LOP days | | Paid Leave Affected | Paid leave days count toward effective paid days; if off, paid leave is treated like unpaid | | Applies to Extra Payable | Included in extra-payable daily rate | | Applies to Leave Salary | Included in leave-salary daily rate |Default Basic (id 1): all flags on. Default HRA (id 2): LOP affected, paid leave not affected — paid leave days reduce HRA in pro-rata mode.
Shown when Per-Day Salary Calculation Method is Calendar Days (Range).
| **Option** | **Intended use** | |------------|------------------| | Range-Based (use payroll cycle length) | Divisor = actual days in the pay period (from–to dates) | | Month-Based (use month of start date) | Divisor = days in the pay period when within one month |Both modes currently use the pay-period length (to − from + 1) as the calendar-day divisor. Cross-month pay runs (e.g. 25 Jun–5 Jul) always use the full range length — 11 days in that example, not 30.
Controls whether public holidays falling inside a continuous unpaid-leave stretch are paid or treated as LOP (countHolidaysDuringLOP, default enabled).
All holidays in the period count as paid. Holidays sandwiched between absent days in an LOP stretch remain paid — they do not increase LOP.
Holidays inside a continuous LOP range are added to LOP days. The payslip note lists how many holiday days were counted as unpaid.
Example: Employee on unpaid leave Mon–Fri. Wednesday is a public holiday.
These header fields on the pay run feed the calculation engine:
| **Field** | **Source when attendance enabled** | **Role** | |-----------|-----------------------------------|----------| | Working Days |period days − holidays − holiday OT days | Divisor (working-days basis); base for present days |
| Holidays | Attendance status Holiday | Reduces working days |
| OT Days / Holiday OT | Attendance status Holiday OT + OT hours | OT payment (category 7); holiday OT reduces working-day count |
| LOP Days | Absent + unpaid leave + (optional) holidays in LOP | Reduces paid days or triggers LOP deductions |
| Paid Leave | Leave Allowance used dates in period | Reduces LOP; excluded from actual working days when category flag is off |
| Extra Payable Days | Manual entry | days × daily rate for extra-pay category |
| Leave Salary Days | Manual entry (validated against allowance balance) | days × leave-salary daily rate |
Attendance statuses used in LOP math:
| **Status** | **Meaning** | **LOP impact** | |------------|-------------|----------------| | Present | Full day present | — | | Leave (half/full) | Paid or unpaid leave | LOP if unpaid leave | | Absent | Full day absent | Full LOP | | Holiday | Public or company holiday | Paid (unless inside LOP stretch and setting off) | | Holiday OT | Holiday with overtime | OT day; reduces working-day count | | Partial absent | Quarter, half, or three-quarter absent | 0.5 / 0.25 / 0.75 LOP |Same employee for every example: Basic ₹30,000/month, pay period 1–30 Jun (30 days), 5 holidays, 2 LOP days, 1 paid leave day (from leave allowance). Only Basic is LOP-affected and paid-leave-affected.
| Basis | Style | Divisor | Per-day rate | Net Basic |
|---|---|---|---|---|
| Working Days | Pro-Rata | 25 | ₹1,200 | ₹27,600 |
| Working Days | Deduction | 25 | ₹1,200 | ₹27,600 |
| Fixed (30) | Pro-Rata | 30 | ₹1,000 | ₹28,000 |
| Fixed (30) | Deduction | 30 | ₹1,000 | ₹28,000 |
| Calendar (30) | Pro-Rata | 30 | ₹1,000 | ₹28,000 |
| Calendar (30) | Deduction | 30 | ₹1,000 | ₹28,000 |
Why Working Days gives a lower net than Fixed/Calendar: holidays reduce the divisor (25 vs 30), so each present day earns more — but with 2 LOP days the net is lower because fewer days are counted as paid (23 vs 28).
| Step | Result |
|---|---|
| Working days = 30 − 5 holidays | 25 |
| Present days = 25 − 2 LOP | 23 |
| Per-day rate = 30,000 ÷ 25 | ₹1,200 |
| Basic earned = 23 × 1,200 | ₹27,600 |
| Step | Result |
|---|---|
| Basic shown (full month) | ₹30,000 |
| Per-day rate = 30,000 ÷ 25 | ₹1,200 |
| LOP deduction = 2 × 1,200 | ₹2,400 |
| Net Basic = 30,000 − 2,400 | ₹27,600 |
LOP posts under deduction category Loss of Pay (id 3).
| Step | Result |
|---|---|
| Paid days = 30 − 2 LOP | 28 |
| Per-day rate = 30,000 ÷ 30 | ₹1,000 |
| Basic earned = 28 × 1,000 | ₹28,000 |
Holidays do not reduce paid days under fixed-days basis.
| Step | Result |
|---|---|
| Basic shown (full month) | ₹30,000 |
| LOP deduction = 2 × 1,000 | ₹2,000 |
| Net Basic = 30,000 − 2,000 | ₹28,000 |
| Step | Result |
|---|---|
| Paid days = 30 − 2 LOP | 28 |
| Per-day rate = 30,000 ÷ 30 | ₹1,000 |
| Basic earned = 28 × 1,000 | ₹28,000 |
| Step | Result |
|---|---|
| Basic shown (full month) | ₹30,000 |
| LOP deduction = 2 × 1,000 | ₹2,000 |
| Net Basic = 30,000 − 2,000 | ₹28,000 |
HRA ₹10,000, same period, working-days basis, pro-rata:
| Step | Result |
|---|---|
| Present days | 23 |
| Effective paid days = 23 − 1 paid leave | 22 |
| Per-day rate = 10,000 ÷ 25 | ₹400 |
| HRA earned = 22 × 400 | ₹8,800 |
Paid leave counts for Basic but not for HRA when the category flag is off.
Employee joins 16 Jun 2026. Pay period 1–30 Jun. Basic ₹30,000. Fixed days = 30, working-days basis, pro-rata. No LOP.
| Step | Result |
|---|---|
| Days in period for employee | 15 (16–30 Jun) |
| Proration factor = 15 ÷ 30 | 0.5 |
| Prorated Basic base = 30,000 × 0.5 | ₹15,000 |
| Working days in period (assume 3 holidays in 15 days) | 12 |
| Present all 12 working days | 12 |
| Per-day rate = 15,000 ÷ 12 | ₹1,250 |
| Basic earned = 12 × 1,250 | ₹15,000 |
When Show Leave Salary Days in Pay Run is enabled, enter days to encash unused leave. Amount uses components marked Applies to Leave Salary (payment category 8).
Leave salary amount = Leave salary days × Σ (monthly amount ÷ divisorDays)
for each leave-salary-affected component
Example: Basic ₹30,000 + HRA ₹10,000 (both leave-salary affected), fixed days 30, 5 leave salary days → daily rate = (30,000 + 10,000) ÷ 30 = ₹1,333.33 → leave salary line = 5 × 1,333.33 = ₹6,666.65.
When Show Extra Payable Days in Pay Run is enabled, enter incentive or special days. Amount uses the Default Category for Extra Pay and components marked Applies to Extra Payable.
Extra pay amount = Extra payable days × Σ (monthly amount ÷ divisorDays)
for each extra-pay-affected component in that category
Example: Basic ₹30,000 (extra-pay affected), fixed days 30, 3 extra payable days → 3 × (30,000 ÷ 30) = ₹3,000 added to the default extra-pay category line.
Disable Consider Attendance in Salary Calculation when you want to run payroll from manual day counts:
Use this for legacy imports, off-site staff without attendance hardware, or the first pay run before attendance go-live.
Pay period 25 Jun – 5 Jul spans 11 calendar days. Under calendar-days basis, divisor = 11 (not 30). Monthly Basic ₹30,000 is prorated by 11 ÷ 30 before LOP adjustment. Plan pay-period boundaries carefully when using calendar-days or working-days basis across month ends.
Set maximum commission and bonus percentages per branch. When you approve a Commission / Bonus on Transaction, the system validates totals against these limits before creating Additional Payment lines for the pay run.
| **Column** | **Description** | |------------|-----------------| | Maximum Commission % | Upper limit for commission on a sale invoice | | Commission Bonus % | Upper limit for bonus on a sale invoice | | Applicable Branch | Branch this limit applies to |UI labels mapped to backend fields used in pay-run calculation:
| **UI label** | **Backend field** | **Values** | |--------------|-------------------|------------| | Per-Day Salary Calculation Method |salaryCalculationBasis | workingDays, fixedDays, calendarDays |
| Salary Calculation Style | salaryCalculationStyle | proRata, deduction |
| Fixed Days for Salary Calculation | fixedSalaryDays | e.g. 30 |
| Calendar Days Mode | calendarDayMode | rangeBased, monthBased |
| Mid-Month Joiner Proration Divisor | midMonthJoinerProrationDivisor | calendar days in month, fixed salary days |
| Count Holidays as Paid During Unpaid Leave | countHolidaysDuringLOP | true (default), false |
| Consider Attendance in Salary Calculation | attendance flag on settings | enabled / disabled |
fixedSalaryDays (e.g. 30), regardless of how many holidays or calendar days the month has.
Why does Working Days basis sometimes pay less than Fixed Days for the same LOP?fixedSalaryDays − LOP, ignoring holidays — so more days stay paid even when holidays reduced the working-day divisor.
When there are zero holidays, do Working Days and Calendar Days give the same result?fixedSalaryDays − LOP. An employee can be on holiday during the period and still receive full fixed-days pay as long as there is no LOP.
What is the difference between Range-Based and Month-Based calendar mode?fixed/calendar days − LOP on other bases. Enable the payslip split-up setting to show Present + Paid Leave in brackets.
How are half-day and partial absent days counted for LOP?noOfLOPDays before salary calculation.
Does paid leave reduce LOP days?overtime hours × hourly OT rate from salary configuration (category 7). Holiday OT: holiday OT hours × holiday OT hourly rate. Attendance OT hours already apply HR Settings → Minimum overtime minutes — days below that threshold contribute 0 regular OT hours to the pay run. Holiday OT and manual Overtime Entry vouchers are not filtered. OT is not reduced by LOP day counts. Recalculate the pay run after changing the threshold; already posted payslips keep the saved amounts.
How are extra payable days calculated?days in period ÷ days in month. The month divisor is calendar days in the month (default) or fixedSalaryDays when basis is Fixed Days and that proration option is selected. LOP is then applied on top of the prorated base.
How is a mid-month exit handled?period days ÷ days in month first, then LOP is applied. Under calendar-days basis the divisor is the actual span (e.g. 11 days for 25 Jun–5 Jul), not the full month length.