It is amusing to see so many diverse viewpoints and one's own interpretation of the query!
It is appalling to see so much confusion with a simple concept as Earned Leave, and I think it calls for an Act to have a Certifying Body for HR Managers.
In what direction should a company act if the concerned HRs give these kinds of contrary opinions? Imagine the situation if the matter was about Medicine & Surgery, Civil Engineering, or say, Finance? One can imagine the result.
I appreciate the correct inputs from Kumar S. and T. Sivasankaran.
Regards.
From India, Delhi
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1446It is appalling to see so much confusion with a simple concept as Earned Leave, and I think it calls for an Act to have a Certifying Body for HR Managers.
In what direction should a company act if the concerned HRs give these kinds of contrary opinions? Imagine the situation if the matter was about Medicine & Surgery, Civil Engineering, or say, Finance? One can imagine the result.
I appreciate the correct inputs from Kumar S. and T. Sivasankaran.
Regards.
From India, Delhi
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Dear Faruk,
Please review the following:
Factories Act, 1948 [sec - 80 (1)]:
For the leave allowed to him under Section 78 or Section 79, as the case may be, a worker shall be entitled to wages at a rate equal to the daily average of his total full-time earnings for the days on which he actually worked during the month immediately preceding his leave, exclusive of any overtime and bonus but inclusive of dearness allowance and the cash equivalent of the advantage accruing through the concessional sale to the worker of food grains and other articles.
They never mentioned other allowances. It's that Pay the Basic + DA + Cash equivalent that you would have paid if he would have come to the company.
Please correct me if I'm wrong.
From India, Bangalore
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Please review the following:
Factories Act, 1948 [sec - 80 (1)]:
For the leave allowed to him under Section 78 or Section 79, as the case may be, a worker shall be entitled to wages at a rate equal to the daily average of his total full-time earnings for the days on which he actually worked during the month immediately preceding his leave, exclusive of any overtime and bonus but inclusive of dearness allowance and the cash equivalent of the advantage accruing through the concessional sale to the worker of food grains and other articles.
They never mentioned other allowances. It's that Pay the Basic + DA + Cash equivalent that you would have paid if he would have come to the company.
Please correct me if I'm wrong.
From India, Bangalore
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Dear All,
As per the Act, whether it's S&E or Factory's Act, it should be 36 days per annum, i.e., 12 days of EL, 12 days of SL, and 12 days of CL.
SL, which stands for Sick Leave, can be carried over to the next year (at the discretion of the management) as the employee may not be sick in the current year but could be next year. For this purpose, it is carried over to the next year and is not encashable.
For CL and EL or PL, it is encashable by the company. In some companies, LTA can be adjusted against their PL after submitting proof.
According to the Act, the leave policy is based on the calculation of BASIC + DA OR VDA, not gross, as this affects the employer outflow. BASIC + DA OR VDA divided by 30 multiplied by the number of days available (basic will be the last salary drawn as per the policy of leave).
Any deviation, please inform me.
Regards,
Vijayalakshmi J
Payroll Management Consultant
From India, Chennai
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As per the Act, whether it's S&E or Factory's Act, it should be 36 days per annum, i.e., 12 days of EL, 12 days of SL, and 12 days of CL.
SL, which stands for Sick Leave, can be carried over to the next year (at the discretion of the management) as the employee may not be sick in the current year but could be next year. For this purpose, it is carried over to the next year and is not encashable.
For CL and EL or PL, it is encashable by the company. In some companies, LTA can be adjusted against their PL after submitting proof.
According to the Act, the leave policy is based on the calculation of BASIC + DA OR VDA, not gross, as this affects the employer outflow. BASIC + DA OR VDA divided by 30 multiplied by the number of days available (basic will be the last salary drawn as per the policy of leave).
Any deviation, please inform me.
Regards,
Vijayalakshmi J
Payroll Management Consultant
From India, Chennai
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As per Factories Act it is not 36 days .There is no provision of CL and SL in Factories Act.Regarding EL encashment Mr Yeshwant is right. Varghese Mathew 04712542059
From India, Thiruvananthapuram
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From India, Thiruvananthapuram
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Dear Sir,
My name is Ashish Rana. I am working in a Delhi-based company. I just want to know if our manpower is working as a contractor in a Haryana-based company (our customer), then is it necessary for us to pay the leave encashment to our staff as per the "Haryana Leave with Wages Rules" or should we pay the leave encashment as per the "Delhi Shops & Establishment Rules."
Please help.
Regards,
Ashish Rana
From India, Jaipur
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My name is Ashish Rana. I am working in a Delhi-based company. I just want to know if our manpower is working as a contractor in a Haryana-based company (our customer), then is it necessary for us to pay the leave encashment to our staff as per the "Haryana Leave with Wages Rules" or should we pay the leave encashment as per the "Delhi Shops & Establishment Rules."
Please help.
Regards,
Ashish Rana
From India, Jaipur
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A number of HR personnel have stated that Earned Leave (EL) should be based on Basic Salary. I am unsure on what grounds they made this claim. Everyone should refer to the Factory Act as it provides clarity on all queries regarding this matter; read Chapter 5. EL payment should be calculated based on the total earnings of employees working full-time. (Note: Factories can be exempted from this provision if they offer better leave facilities to employees, subject to approval in the company's standing orders). Therefore, it is evident that EL should be based on the gross salary. I am also aware that many companies provide EL encashment based on the basic salary, which is entirely unlawful unless they have an approved leave policy in place.
From India, Faridabad
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From India, Faridabad
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Hello Vani,
Leave encashment does not include the SL and CLs. As per most of the Shops and Establishment acts, leave encashment is only on Earned leave. The calculation is on Basic generally and varies from company to company as a practice. Please refer to the appropriate legal positions before posting anything.
From India, Hyderabad
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Leave encashment does not include the SL and CLs. As per most of the Shops and Establishment acts, leave encashment is only on Earned leave. The calculation is on Basic generally and varies from company to company as a practice. Please refer to the appropriate legal positions before posting anything.
From India, Hyderabad
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(Fact Checked)-[The user's reply is generally correct. Leave encashment typically includes only earned leave and the calculation is often based on the basic salary, varying by company practice. However, it is advisable to always refer to the relevant legal provisions for accurate information.] (1 Acknowledge point)
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please tell me who to calculate leave wages for full final settlement time which id act
From India, Hyderabad
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From India, Hyderabad
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(Fact Checked)-The calculation of leave wages for full and final settlement should be based on the Basic salary, not on the Gross salary. This is in line with labor laws and best practices. (1 Acknowledge point)
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The calculation of earned leaves (also known as accrued leaves or annual leave) and whether it's based on gross salary or basic salary depends on company policy and local regulations. Here's a breakdown of each approach:
Earned Leaves Based on Gross Salary:
In this approach, earned leaves are calculated based on the employee's total gross salary, which includes all components such as basic salary, allowances, bonuses, and other benefits. Using gross salary for earned leave calculations may result in a higher accrual rate, as it takes into account all forms of compensation received by the employee. This method is often used by companies that want to provide employees with leave benefits that reflect their total compensation package.
Earned Leaves Based on Basic Salary:
Alternatively, earned leaves can be calculated based only on the employee's basic salary, excluding other components such as allowances and bonuses. Using basic salary for earned leave calculations may result in a lower accrual rate compared to using gross salary. This method is commonly used by companies as it provides a more stable and consistent basis for calculating leave entitlements, especially when other components of compensation may vary. It's essential for employers to clearly define their policy regarding earned leave calculations in their employment contracts or company handbook to avoid any confusion or disputes. Additionally, they should ensure compliance with local labor laws and regulations, which may specify requirements for earned leave entitlements and calculation methods.
Ultimately, whether earned leaves are based on gross salary or basic salary depends on various factors, including company practices, employee agreements, and legal requirements. Employers should carefully consider these factors when determining the most appropriate approach for their organization.
From India, Mumbai
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Earned Leaves Based on Gross Salary:
In this approach, earned leaves are calculated based on the employee's total gross salary, which includes all components such as basic salary, allowances, bonuses, and other benefits. Using gross salary for earned leave calculations may result in a higher accrual rate, as it takes into account all forms of compensation received by the employee. This method is often used by companies that want to provide employees with leave benefits that reflect their total compensation package.
Earned Leaves Based on Basic Salary:
Alternatively, earned leaves can be calculated based only on the employee's basic salary, excluding other components such as allowances and bonuses. Using basic salary for earned leave calculations may result in a lower accrual rate compared to using gross salary. This method is commonly used by companies as it provides a more stable and consistent basis for calculating leave entitlements, especially when other components of compensation may vary. It's essential for employers to clearly define their policy regarding earned leave calculations in their employment contracts or company handbook to avoid any confusion or disputes. Additionally, they should ensure compliance with local labor laws and regulations, which may specify requirements for earned leave entitlements and calculation methods.
Ultimately, whether earned leaves are based on gross salary or basic salary depends on various factors, including company practices, employee agreements, and legal requirements. Employers should carefully consider these factors when determining the most appropriate approach for their organization.
From India, Mumbai
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(Fact Checked)-The user reply provides accurate information regarding the calculation of earned leaves based on gross salary versus basic salary. The response is well-detailed, informative, and aligns with company policies and local regulations. (1 Acknowledge point)
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(Fact Checked)-The user's reply is not directly relevant to the original post about calculating earned leave (EL) on Basic instead of Gross salary. No correction needed. (1 Acknowledge point)