In the Employment Act 1955, they generally talk about two figures:
(i) 26 days; and
(ii) Calendar days (the number of days in whichever month we are referring to, eg. April has 30 days, August has 31 days).
When any clauses refer to “Ordinary Rate of Pay”, as per Clause 60I(1A), it states:
“Where an employee is employed on a monthly rate of pay, the ordinary rate of pay, shall be calculated according to the following formula: [Monthly Rate of Pay] / 26”
This formula is applicable to items like overtime rates, public holiday pays, and annual leave encashment.
Then, effective 1st Jan 2023, the Employment (Amendment) Act 2022 introduced a new clause 18A which generally guides the deduction of wages:
[Monthly wages]/[Number of days of the particular wage period ie. calendar days] x Number of days eligible in the wage period
This is applicable when considering pro-rating salary for incomplete month’s service, which typically occurs on the first day or last day of employment, and when tabulating unpaid leave.
So, it’s pretty straightforward. When we want to give money to the employee, we use the formula that results in more money, and when we want to deduct money from the employee, we use the formula that results in less money.
However, nothing is set in stone. The law does not prevent employers from being more generous by giving more and deducting less, but the reverse is not permitted.
Gitu. Happy weekend everybody!
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