Thank you very much sir for an elaborated answer to each query. Much appreciated for the guidance.
However, may be because of so many queries, one last query was unanswered.
Doubt 6:
If the person is resigning and has leaves to his account which as per the rule should be encashed, then in such scenario -
1) For the current year of service, how many leaves should the person be eligible for encashment? Full 21 days' leaves or it would be calculated on pro-rata basis depending on the number of months served?
2) Should we be compensating them on Basic + DA or on gross? As per the Pay during the leave, it is enough to pay Basic + DA so do the employer have any further obligations apart from basic + da?
I believe the leaves are to be taken on pro-rata basis.
2nd part of the query was already covered when you mentioned that leave encashment should be on gross.
Correct me if wrong.
Thanks once again.
From India, Mumbai
377However, may be because of so many queries, one last query was unanswered.
Doubt 6:
If the person is resigning and has leaves to his account which as per the rule should be encashed, then in such scenario -
1) For the current year of service, how many leaves should the person be eligible for encashment? Full 21 days' leaves or it would be calculated on pro-rata basis depending on the number of months served?
2) Should we be compensating them on Basic + DA or on gross? As per the Pay during the leave, it is enough to pay Basic + DA so do the employer have any further obligations apart from basic + da?
I believe the leaves are to be taken on pro-rata basis.
2nd part of the query was already covered when you mentioned that leave encashment should be on gross.
Correct me if wrong.
Thanks once again.
From India, Mumbai
Sorry, I thought this was self explanatory
Reading it again, I realise it is not.
1. Leaves are credited to the account of a person at the end of a year. For convince it is taken as calendar year (I think it is mandated in the act)
2. So when the person leaves, he would have leave to the credit of his leave account which would have been for the previous year. If he leaves at the start of the year, he would get leave for precious year.
3. Few companies voluntarily give leave credit proportionately at the end of each month. But as far as I know, it is not required by law.
So, when he leaves, he will get unutilised leave for previous year, not current year.
And amount paid will be on basis of gross salary excluding overtime,
From India, Mumbai
Reading it again, I realise it is not.
1. Leaves are credited to the account of a person at the end of a year. For convince it is taken as calendar year (I think it is mandated in the act)
2. So when the person leaves, he would have leave to the credit of his leave account which would have been for the previous year. If he leaves at the start of the year, he would get leave for precious year.
3. Few companies voluntarily give leave credit proportionately at the end of each month. But as far as I know, it is not required by law.
So, when he leaves, he will get unutilised leave for previous year, not current year.
And amount paid will be on basis of gross salary excluding overtime,
From India, Mumbai
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Taxability of leave encashment on resignation.doc