Thank you very much, sir, for an elaborated answer to each query. Much appreciated for the guidance. However, maybe 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 a scenario:
1) For the current year of service, how many leaves should the person be eligible for encashment? Full 21 days' leaves, or would it be calculated on a 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 a pro-rata basis. The second 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
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379Doubt 6: If the person is resigning and has leaves to his account which, as per the rule, should be encashed, then in such a scenario:
1) For the current year of service, how many leaves should the person be eligible for encashment? Full 21 days' leaves, or would it be calculated on a 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 a pro-rata basis. The second 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
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Sorry, I thought this was self-explanatory. Reading it again, I realize it is not.
Leaves are credited to the account of a person at the end of a year. For convenience, it is taken as the calendar year (I think it is mandated in the act). 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 the previous year.
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 unutilized leave for the previous year, not the current year. And the amount paid will be on the basis of gross salary excluding overtime.
Thank you very much, sir, for an elaborated answer to each query. Much appreciated for the guidance. However, maybe because of so many queries, one last query was unanswered.
Doubt 6: If the person is resigning and has leaves to his account which should be encashed as per the rule, then in such a scenario:
1) For the current year of service, how many leaves should the person be eligible for encashment? Full 21 days' leaves, or should it be calculated on a 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 employers have any further obligations apart from basic + DA? I believe the leaves are to be taken on a pro-rata basis.
The second 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
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Leaves are credited to the account of a person at the end of a year. For convenience, it is taken as the calendar year (I think it is mandated in the act). 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 the previous year.
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 unutilized leave for the previous year, not the current year. And the amount paid will be on the basis of gross salary excluding overtime.
Thank you very much, sir, for an elaborated answer to each query. Much appreciated for the guidance. However, maybe because of so many queries, one last query was unanswered.
Doubt 6: If the person is resigning and has leaves to his account which should be encashed as per the rule, then in such a scenario:
1) For the current year of service, how many leaves should the person be eligible for encashment? Full 21 days' leaves, or should it be calculated on a 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 employers have any further obligations apart from basic + DA? I believe the leaves are to be taken on a pro-rata basis.
The second 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
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Taxability of leave encashment on resignation.doc