Hi all,
We have an earned leave policy. We have to encash the leaves which are more than 60 for every employee, but every year we are putting aside the encashed leaves. Now, some of our employees have leave balances of 100 or more. Management now wants to encash all the leaves for every employee, starting with the balance of 30. However, they want to encash the leaves with respect to the basics in the respective years.
For example:
x employee:
- Encashed leaves: 15
- Year: 2008
- Basic amount: 4500
- Calculation: 4500/30*15
- Encashed leaves: 15
- Year: 2009
- Basic amount: 5000
- Calculation: 5000/30*15
- Encashed leaves: 15
- Year: 2010
- Basic amount: 6000
- Calculation: 6000/30*15
- Encashed leaves: 15
- Year: 2012
- Basic amount: 7500
- Calculation: 7500/30*15
Present balance: 60
- Year: 2013
- Basic amount: 8000
- Calculation: 8000/30*30
Is this the right approach? Kindly suggest on this.
Regards
From India, Hyderabad
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10We have an earned leave policy. We have to encash the leaves which are more than 60 for every employee, but every year we are putting aside the encashed leaves. Now, some of our employees have leave balances of 100 or more. Management now wants to encash all the leaves for every employee, starting with the balance of 30. However, they want to encash the leaves with respect to the basics in the respective years.
For example:
x employee:
- Encashed leaves: 15
- Year: 2008
- Basic amount: 4500
- Calculation: 4500/30*15
- Encashed leaves: 15
- Year: 2009
- Basic amount: 5000
- Calculation: 5000/30*15
- Encashed leaves: 15
- Year: 2010
- Basic amount: 6000
- Calculation: 6000/30*15
- Encashed leaves: 15
- Year: 2012
- Basic amount: 7500
- Calculation: 7500/30*15
Present balance: 60
- Year: 2013
- Basic amount: 8000
- Calculation: 8000/30*30
Is this the right approach? Kindly suggest on this.
Regards
From India, Hyderabad
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Dear Mr. Prasad,
Encashment of leave is calculated based on the "Last Salary Drawn" and not on a yearly basis. This is why staff are encouraged to accumulate leave up to the allowable extent; otherwise, they would have encashed it every year.
RSP
From India, Mumbai
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Encashment of leave is calculated based on the "Last Salary Drawn" and not on a yearly basis. This is why staff are encouraged to accumulate leave up to the allowable extent; otherwise, they would have encashed it every year.
RSP
From India, Mumbai
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Dear Senior, My question is that would be calculated on the Gross salary or basic salary? Regards, Jayeeta
From India, Calcutta
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From India, Calcutta
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Hi It will be calculated on Basic + DA, if DA is not there then, only Basic will be considered. Chills Karthik Nayudu
From India, Vijayawada
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From India, Vijayawada
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Dear all, Leave encashment should be done on Gross salary, and the formula should be : gross salary/26* no. of leaves. Thanks & Regards, From, Sumit Kumar Saxena
From India, Ghaziabad
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From India, Ghaziabad
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Dear friends,
There cannot be any confusion. Leave encashment should be calculated at the present salary (gross), i.e., what he/she would have drawn when on authorized leave (minus productivity-linked bonus + OT and such allowances which are not automatically accruing to an employee every month). Please be advised that when referred to only Basic, it denotes "Basic Pay - excluding other allowances" only. When it's "Gross salary/total emoluments," it means "Basic pay + DA + other allowances." At the same time, the term "CTC" has a different composition which includes Gross Salary + OT + Bonus + PF + Gratuity + leave encashment, etc. It is requested that everybody better to have a common connotation and understanding in order to avoid confusion in the usage of such terms.
Kumar S.
From India, Bangalore
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There cannot be any confusion. Leave encashment should be calculated at the present salary (gross), i.e., what he/she would have drawn when on authorized leave (minus productivity-linked bonus + OT and such allowances which are not automatically accruing to an employee every month). Please be advised that when referred to only Basic, it denotes "Basic Pay - excluding other allowances" only. When it's "Gross salary/total emoluments," it means "Basic pay + DA + other allowances." At the same time, the term "CTC" has a different composition which includes Gross Salary + OT + Bonus + PF + Gratuity + leave encashment, etc. It is requested that everybody better to have a common connotation and understanding in order to avoid confusion in the usage of such terms.
Kumar S.
From India, Bangalore
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Dear Seniors,
We are a recruitment company, but we do not implement leave encashment policy in our company. Could I please know why our company is not using these terms? As I asked whether it's depend on the company policy, we use 21 PL and 10 SL for our employees.
Regards, Priya
From India, Madras
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We are a recruitment company, but we do not implement leave encashment policy in our company. Could I please know why our company is not using these terms? As I asked whether it's depend on the company policy, we use 21 PL and 10 SL for our employees.
Regards, Priya
From India, Madras
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Dear Sir I am in require of security agreement regarding sale of goods. please help
From India, Indore
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From India, Indore
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The calculation of leave encashment is based on the gross salary at the time of encashment (which is generally when the employee leaves the organization or retires). The calculation can be done based on inputs from Mr. Saxena and Mr. S. Kumar. It is the same formula used in the Indian Army.
From India, Mumbai
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From India, Mumbai
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PF Contribution on Leave Encashment - Clarification by EPFO.pdf
SC -PF judgment on No PF on Leave encashment.doc
EPFO Circular Leave Encashment.jpg