I have an urgent question. An employee has a maximum cap of leaves at 90 days. The Earned Leave (EL) balance at the time of resigning is 31 days, which is 91 leave balance minus notice period recovery days (60 days). Can we not pay the employee for leave encashment on this basis, which will be 31 * Basic salary / 30? Is it necessary to show leave encashment separately and notice period recovery separately?
From India, New Delhi
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From India, New Delhi
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ENCASHMENT OF LEAVE
1.0 OBJECTIVE:
SCOPE
The rules for encashment of leave shall cover all regular employees of the company, excluding those on deputation from Government/other organizations and company employees on deputation to others.
3.0 SANCTIONING AUTHORITY
The authorities who are competent to sanction leave shall be the sanctioning authority for approving encashment of leave under these rules.
ENCASHMENT BENEFITS
The encashment of leave shall be regulated on the basis of the last pay drawn, which includes basic pay, dearness allowance, personal pay, if any, non-practicing allowance for doctors, deputation allowance in respect of employees of the company on deputation, allowance admissible to EDP and other staff working in Finance & Accounts department.
4.2 The encashment benefit shall not be reckoned as wage/salary while working out overtime, Gratuity, Provident Fund, bonus under the Bonus Act, etc.
CLARIFICATION
The leave to be encashed under these rules would be Earned Leave only and not any other kind of leave. The encashment benefit will be regulated based on the last pay drawn, which should be the monthly rate of pay of the employee immediately before proceeding on leave. A month will generally be a calendar month of 30 days. Illustration: Last pay drawn X no. of days for which encashment allowed. Illustration: Last pay drawn X no. of days for which encashment allowed/30.
Regards,
Amit Gaur
From India, Jaipur
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11.0 OBJECTIVE:
SCOPE
The rules for encashment of leave shall cover all regular employees of the company, excluding those on deputation from Government/other organizations and company employees on deputation to others.
3.0 SANCTIONING AUTHORITY
The authorities who are competent to sanction leave shall be the sanctioning authority for approving encashment of leave under these rules.
ENCASHMENT BENEFITS
The encashment of leave shall be regulated on the basis of the last pay drawn, which includes basic pay, dearness allowance, personal pay, if any, non-practicing allowance for doctors, deputation allowance in respect of employees of the company on deputation, allowance admissible to EDP and other staff working in Finance & Accounts department.
4.2 The encashment benefit shall not be reckoned as wage/salary while working out overtime, Gratuity, Provident Fund, bonus under the Bonus Act, etc.
CLARIFICATION
The leave to be encashed under these rules would be Earned Leave only and not any other kind of leave. The encashment benefit will be regulated based on the last pay drawn, which should be the monthly rate of pay of the employee immediately before proceeding on leave. A month will generally be a calendar month of 30 days. Illustration: Last pay drawn X no. of days for which encashment allowed. Illustration: Last pay drawn X no. of days for which encashment allowed/30.
Regards,
Amit Gaur
From India, Jaipur
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Greetings! The Leave Encashment must happen on all the components of the salary. Taking care of labor, the daily wage of employees should be paid. This means it would be a basic salary plus DA plus other components, if any, must be considered. Therefore, it must be paid on gross. However, many times companies do not agree and pay only on basic to save some money. By rules, this is not the right thing to do. If an employee gets into a dispute on a basic payment matter with the employer, then the employer may have to pay the employee on gross. If you wish us to handle your HR matters, do connect with us by searching 'Salahkaar Consultants' on the internet.
From India, Pune
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From India, Pune
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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