Dear Prasad,
In your case, you have to settle the leave wages with the current salary/wage you have committed to pay your employees as per the terms of employment. The Factories Act clearly states that Leave with wages is 'all total full-time earnings exclusive of overtime and bonus but inclusive of DA.' If we refer to the definition of wages under the Payment of Wages Act for better clarity, it is further evident that any remuneration payable under any award or agreement and any additional remuneration payable under the terms of employment but does not include bonus and other allowances.
Therefore, we can conclude that you have to make this leave settlement with the last drawn salary/wages. If you pay any additional pay other than what is mentioned in your terms of employment, that should not be considered for leave wages calculation.
Regards
From India, Coimbatore
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50In your case, you have to settle the leave wages with the current salary/wage you have committed to pay your employees as per the terms of employment. The Factories Act clearly states that Leave with wages is 'all total full-time earnings exclusive of overtime and bonus but inclusive of DA.' If we refer to the definition of wages under the Payment of Wages Act for better clarity, it is further evident that any remuneration payable under any award or agreement and any additional remuneration payable under the terms of employment but does not include bonus and other allowances.
Therefore, we can conclude that you have to make this leave settlement with the last drawn salary/wages. If you pay any additional pay other than what is mentioned in your terms of employment, that should not be considered for leave wages calculation.
Regards
From India, Coimbatore
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PF Contribution on Leave Encashment - Clarification by EPFO.pdf
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EPFO Circular Leave Encashment.jpg