Can anybody suggest how the leave encashment will be calculated if an employee's salary has been raised at the end of the year? For example, if the salary changed in March. Should the leave encashment be calculated based on the current basic salary, or should it be prorated for 11 months in the old basic salary and one month in the current basic salary?
From India, Madras
From India, Madras
Hi Yuvadhana,
If your company's Leave Type happens to be "Paid / Privileged / Earned Leave," then there comes the concept of Leave Encashment. Generally, during the beginning of the financial year, the employees are credited with all types of leaves entitled for that particular financial year, and the employee is allowed by the employer (based on the company's policy) to accumulate their "Paid / Privileged / Earned Leaves" only to a specific capping limit. So, if the number of leaves accumulated by an employee exceeds the capping limit, then the amount is encashed for the number of units that have exceeded the capping limit.
For Example:
Employee Name - Reshma
Grade - II A
Department - Finance
Leave Types Entitled - PL (Paid Leave): 24 days a year, LTA (Travel Leave): 12 days a Year, ML (Maternity Leave): 84 days a year
Leaves until March 2010 - PL: 65 days, LTA: 0, ML: 84 days
PL Capping Limit for Grade II A - 60 days
Leave Entitlement for April 2010 - March 2011:
PL (Paid Leave): 24 days a year, LTA (Travel Leave): 12 days a Year, ML (Maternity Leave): 84 days a year
Leave Entitlement for Reshmi for the Period April 2010 - March 2011:
LTA: 12 days
ML: 84 days
PL allowed = 24 days (Current year entitlement) + 65 days (carry over from the previous year accumulations) = 89 days
But PL Capping Limit happens to be 60 days
So, the number of encashable PL units happens to be 89-60 = 29 units
And PL becomes 60 days.
Now for the Calculation Part,
For the 29 units,
Leave Encashment rule happens to be 29 * Current Month's i.e., April's (Basic + DA)/30; DA = 0 for those who don't have DA.
But the Capping limit may vary as per the policy of the company.
In case of Resignation, the number of encashable units eligible is calculated based on the proration logic on the number of leaves allowed this year. But in all cases, according to me, the leaves are encashed based on the current month's basic / Current month's Basic + DA.
Regards,
Vidyaa
From India, Madras
1If your company's Leave Type happens to be "Paid / Privileged / Earned Leave," then there comes the concept of Leave Encashment. Generally, during the beginning of the financial year, the employees are credited with all types of leaves entitled for that particular financial year, and the employee is allowed by the employer (based on the company's policy) to accumulate their "Paid / Privileged / Earned Leaves" only to a specific capping limit. So, if the number of leaves accumulated by an employee exceeds the capping limit, then the amount is encashed for the number of units that have exceeded the capping limit.
For Example:
Employee Name - Reshma
Grade - II A
Department - Finance
Leave Types Entitled - PL (Paid Leave): 24 days a year, LTA (Travel Leave): 12 days a Year, ML (Maternity Leave): 84 days a year
Leaves until March 2010 - PL: 65 days, LTA: 0, ML: 84 days
PL Capping Limit for Grade II A - 60 days
Leave Entitlement for April 2010 - March 2011:
PL (Paid Leave): 24 days a year, LTA (Travel Leave): 12 days a Year, ML (Maternity Leave): 84 days a year
Leave Entitlement for Reshmi for the Period April 2010 - March 2011:
LTA: 12 days
ML: 84 days
PL allowed = 24 days (Current year entitlement) + 65 days (carry over from the previous year accumulations) = 89 days
But PL Capping Limit happens to be 60 days
So, the number of encashable PL units happens to be 89-60 = 29 units
And PL becomes 60 days.
Now for the Calculation Part,
For the 29 units,
Leave Encashment rule happens to be 29 * Current Month's i.e., April's (Basic + DA)/30; DA = 0 for those who don't have DA.
But the Capping limit may vary as per the policy of the company.
In case of Resignation, the number of encashable units eligible is calculated based on the proration logic on the number of leaves allowed this year. But in all cases, according to me, the leaves are encashed based on the current month's basic / Current month's Basic + DA.
Regards,
Vidyaa
From India, Madras
Leave Encashment = Current Month's Basic / 26 * No. of leaves to be encashed.
The total number of leaves to be encashed depends on the Leave Policy of an organization. In general, an employee is entitled to the encashment of their Earned Leaves.
I hope I made my point clear.
Regards, Surabhi
From Germany, Frankfurt Am Main
The total number of leaves to be encashed depends on the Leave Policy of an organization. In general, an employee is entitled to the encashment of their Earned Leaves.
I hope I made my point clear.
Regards, Surabhi
From Germany, Frankfurt Am Main
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