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