Dear Experts,
Please tell me, what will be the basis of calculation in payment of NOTICE PAY & LEAVE ENCASHMENT?
Will it be calculated on MONTHLY BASIC + DA only or on the TOTAL MONTHLY SALARY INCLUDING ALL ALLOWANCES?
Please guide.
Thanks,
P. Bagchi
From India, Calcutta
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Please tell me, what will be the basis of calculation in payment of NOTICE PAY & LEAVE ENCASHMENT?
Will it be calculated on MONTHLY BASIC + DA only or on the TOTAL MONTHLY SALARY INCLUDING ALL ALLOWANCES?
Please guide.
Thanks,
P. Bagchi
From India, Calcutta
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Hi, Notice pay is calculated based on the Gross salary of the employee. As for as Leave encashment is concerned it calculated based on Basic+DA.
From India, Madras
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1015From India, Madras
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The salary, as per private company offer letters (other than companies which follow some rules with regard to pay fixation), shall contain allowances that are considered for deduction proportionate to the days not worked, i.e., Loss of pay leave days. In such cases, allowances are just camouflage allowances and are part of basic wages only. For example, paying HRA as part of the salary to all employees without reference to residential status of the employees, paying Special allowance to all employees without reference to any special skill, payment of conveyance allowance equally for all employees irrespective of distance covered for reaching the office, are such allowances which are usually paid by private organizations just to reduce the employers' burden of various contributions including gratuity and leave encashments.
The old concept was that there would be a basic salary which would increase year on year depending upon the annual increment fixed or performance of the employee and an allowance called dearness allowance which is paid to compensate the cost of living increase. In addition to these two, certain employees will be paid a special allowance considering the special skill that the employee should put in for getting the results. Some employees who have to take a house for lease will be paid HRA. Some are paid education allowance. These are allowances paid over and above the salary.
In such cases, the wages shall mean basic and DA alone will qualify for all statutory payments. However, when you have a whole figure as a salary and then you bifurcate it into small components, then the salary should mean the whole amount only.
From India, Kannur
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The old concept was that there would be a basic salary which would increase year on year depending upon the annual increment fixed or performance of the employee and an allowance called dearness allowance which is paid to compensate the cost of living increase. In addition to these two, certain employees will be paid a special allowance considering the special skill that the employee should put in for getting the results. Some employees who have to take a house for lease will be paid HRA. Some are paid education allowance. These are allowances paid over and above the salary.
In such cases, the wages shall mean basic and DA alone will qualify for all statutory payments. However, when you have a whole figure as a salary and then you bifurcate it into small components, then the salary should mean the whole amount only.
From India, Kannur
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Leave Encashment & Salary Calculation.xls x
LEAVE ENCASHMENT NOT INCLUDED IN WAGES FOR P. F. CALCULATION.pdf