Jeddah: While most companies switched to the Gregorian calendar to pay employees’ salaries, some experts are calling for the return to the Hijri calendar. It will better serve the interests of employees who, they say, lose 15 days of salary a year, or 15 months over a 40-year professional life, due to the Gregorian calendar, according to a media report.
Thus, they claim, that companies benefit from paying employees as per the Gregorian calendar when they pay them their end of service benefits.
“Employees should be compensated for the losses associated with salary payment based on the Gregorian calendar, and companies should count the retirement age based on the number of years of service as per the Hijri calendar", Hussein Al-Raqeeb, a financial analyst, is quoted as saying by Arab News.
He said: “Payment of salaries based on the Gregorian calendar also puts pressure on the employee during Ramadan if the days of the Gregorian month do not match with the month of Ramadan.”
He explained: “Many employees are thus forced to rely on borrowing during this month, and companies save 11 days of salary payment per employee because the Gregorian year is 365 days, not 354 like the Hijri.”
In Hijri calendar, a new month begins with sighting of crescent i.e the new moon on 29th of every month. If the crescent is sighted, the new month begins the following day. Else, the next day is counted as 30th day, and new month begins thereafter.
Al-Raqeeb said the government, despite deciding its budget based on the Gregorian calendar, issues salaries to employees based on the Hijri calendar. If a company has 2,000 employees, for example, with an average salary of SR5,000, it can save SR3.67 million per year.
Companies also pay salaries on the 31st or the first day of the following month, so as not to lose days if an employee leaves before the end of the month, he said.
However, according to economist Dr. Salem Bajaja, “the conversion to paying salaries based on the Gregorian calendar was very important, as it is more regular and in line with all international financial systems, especially in the banking sector”.
With around 10 million foreigners working in the Kingdom, this more regulated payment system allows for better cash flows and compatibility with financial systems, despite the shortfalls of losing 11 days of wages annually, he said.
Talaat Hafez, secretary of the committee of media and banking awareness, said the role of banks in the issuance of wages is to ensure compliance with agreements between banks and concerned parties regarding salary payments, regardless of the date.
Government agencies have the date set on the 25th of each Hijri month, while in the private sector companies choose the date, not the banks.