Arrears Calculation
Arrears Calculation
Handle retroactive pay adjustments cleanly — recalculate past periods when salary changes are effective from a back-dated month.
The Arrear Calculation feature allows you to pay employees for salary differences arising due to retrospective changes in salary, allowances, or other pay components. This ensures that employees are compensated correctly when revisions are applied to previous payroll periods.
In a salary revision, based on the Effective From date and Payout Month, the arrear will be automatically calculated once the revision is approved.
The arrear amount will apply to all salary components and retirals.
Suppose the salary revision happens in April but the increased amount was not disbursed in the same month. Then, the increased amount needs to be disbursed along with the regular salary in the upcoming month (May). Although we revise the salary from the past-dated finalized payroll, the arrear will be calculated automatically and paid in the upcoming payroll.
Example
Old Salary: ₹30,000 per month
Revision Effective From: 1st April
New Salary: ₹35,000 per month
Increment: ₹5,000
Salary Released in April: ₹30,000
Release Month: May
Calculation for May
Regular salary for May: ₹35,000 (Revised salary for the month)
Arrears for April: ₹5,000 (Difference due to revision)
Total Payable in May: ₹35,000 + ₹5,000 = ₹40,000
Fig: Arrears Calculation
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