Dear Seniors,
What is the formula for the calculation of EL's?
Basic: 26 x No. of EL's
If the above formula is correct, please provide any valid document from the ACT stating that the above formula is correct.
Regards,
K. Saikishore
From India
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54What is the formula for the calculation of EL's?
Basic: 26 x No. of EL's
If the above formula is correct, please provide any valid document from the ACT stating that the above formula is correct.
Regards,
K. Saikishore
From India
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Dear K. Saikishore,
I believe Section 79 of the Factories Act 1948 will be helpful to you. This is the standard that all companies in India should follow. However, this act will not apply if the industry or company implements anything better than this.
79. ANNUAL LEAVE WITH WAGES. - (1) Every worker who has worked for a period of 240 days or more in a factory during a calendar year shall be allowed leave with wages for a number of days calculated at the rate of:
(i) if an adult, one day for every twenty days of work performed by him during the previous calendar year;
(ii) if a child, one day for every fifteen days of work performed by him during the previous calendar year.
Explanation 1: For the purpose of this sub-section:
(a) any days of layoff, by agreement or contract, or as permissible under the standing orders;
(b) in the case of a female worker, maternity leave for any number of days not exceeding twelve weeks; and
(c) the leave earned in the year prior to that in which the leave is enjoyed; shall be deemed as days on which the worker has worked in a factory for the purpose of computation of the period of 240 days or more, but he shall not earn leave for these days.
Explanation 2: The leave admissible under this sub-section shall be exclusive of all holidays whether occurring during or at either end of the period of leave.
(2) A worker whose service commences otherwise than on the first day of January shall be entitled to leave with wages at the rate laid down in clause (i) or, as the case may be, clause (ii) of sub-section (1) if he has worked for two-thirds of the total number of days in the remainder of the calendar year.
(3) If a worker is discharged or dismissed from service or quits his employment or is superannuated or dies while in service during the calendar year, he or his heir or nominee, as the case may be, shall be entitled to wages in lieu of the quantum of leave to which he was entitled immediately before his discharge, dismissal, quitting of employment, superannuation, or death calculated at the rates specified in sub-section (1), even if he had not worked for the entire period specified in sub-section (1) or sub-section (2) making him eligible to avail of such leave, and such payment shall be made:
(i) where the worker is discharged or dismissed or quits employment, before the expiry of the second working day from the date of such discharge, dismissal, or quitting, and
(ii) where the worker is superannuated or dies while in service, before the expiry of two months from the date of such superannuation or death.
(4) In calculating leave under this section, a fraction of leave of half a day or more shall be treated as one full day's leave, and a fraction of less than half a day shall be omitted.
(5) If a worker does not take the whole leave allowed to him in any one calendar year under sub-section (1) or sub-section (2), any leave not taken by him shall be added to the leave to be allowed to him in the succeeding calendar year:
Provided that the total number of days of leave that may be carried forward to a succeeding year shall not exceed thirty in the case of an adult or forty in the case of a child:
Provided further that a worker who has applied for leave with wages but has not been given such leave in accordance with any scheme laid down in sub-sections (8) and (9) or in contravention of sub-section (10) shall be entitled to carry forward the leave refused without any limit.
(6) A worker may at any time apply in writing to the manager of a factory not less than fifteen days before the date on which he wishes his leave to begin, to take all the leave or any portion allowable to him during the calendar year:
Provided that the application shall be made not less than thirty days before the date on which the worker wishes his leave to begin if he is employed in a public utility service as defined in clause (n) of section 2 of the Industrial Disputes Act, 1947 (14 of 1947):
Provided further that the number of times in which leave may be taken during any year shall not exceed three.
(7) If a worker wants to avail himself of the leave with wages due to him to cover a period of illness, he shall be granted such leave even if the application for leave is not made within the time specified in sub-section (6); and in such a case, wages as admissible under section 81 shall be paid not later than fifteen days, or in the case of a public utility service not later than thirty days from the date of the application for leave.
(8) For the purpose of ensuring the continuity of work, the occupier or manager of the factory, in agreement with the Works Committee of the factory constituted under section 3 of the Industrial Disputes Act, 1947 (14 of 1947), or a similar Committee constituted under any other Act or if there is no such Works Committee or a similar Committee in the factory, in agreement with the representatives of the workers therein chosen in the prescribed manner, may lodge with the Chief Inspector a scheme in writing whereby the grant of leave allowable under this section may be regulated.
(9) A scheme lodged under sub-section (8) shall be displayed at some conspicuous and convenient places in the factory and shall be in force for a period of twelve months from the date on which it comes into force, and may thereafter be renewed with or without modification for a further period of twelve months at a time, by the manager in agreement with the Works Committee or a similar Committee, or as the case may be, in agreement with the representatives of the workers as specified in sub-section (8), and a notice of renewal shall be sent to the Chief Inspector before it is renewed.
(10) An application for leave that does not contravene the provisions of sub-section (6) shall not be refused unless refusal is in accordance with the scheme for the time being in operation under sub-sections (8) and (9).
(11) If the employment of a worker who is entitled to leave under sub-section (1) or sub-section (2), as the case may be, is terminated by the occupier before he has taken the entire leave to which he is entitled, or if having applied for and having not been granted such leave, the worker quits his employment before he has taken the leave, the occupier of the factory shall pay him the amount payable under section 80 in respect of the leave not taken, and such payment shall be made, where the employment of the worker is terminated by the occupier, before the expiry of the second working day after such termination, and where the worker quits his employment, on or before the next payday.
(12) The unavailed leave of a worker shall not be taken into consideration in computing the period of any notice required to be given before discharge or dismissal.
From India, Mumbai
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I believe Section 79 of the Factories Act 1948 will be helpful to you. This is the standard that all companies in India should follow. However, this act will not apply if the industry or company implements anything better than this.
79. ANNUAL LEAVE WITH WAGES. - (1) Every worker who has worked for a period of 240 days or more in a factory during a calendar year shall be allowed leave with wages for a number of days calculated at the rate of:
(i) if an adult, one day for every twenty days of work performed by him during the previous calendar year;
(ii) if a child, one day for every fifteen days of work performed by him during the previous calendar year.
Explanation 1: For the purpose of this sub-section:
(a) any days of layoff, by agreement or contract, or as permissible under the standing orders;
(b) in the case of a female worker, maternity leave for any number of days not exceeding twelve weeks; and
(c) the leave earned in the year prior to that in which the leave is enjoyed; shall be deemed as days on which the worker has worked in a factory for the purpose of computation of the period of 240 days or more, but he shall not earn leave for these days.
Explanation 2: The leave admissible under this sub-section shall be exclusive of all holidays whether occurring during or at either end of the period of leave.
(2) A worker whose service commences otherwise than on the first day of January shall be entitled to leave with wages at the rate laid down in clause (i) or, as the case may be, clause (ii) of sub-section (1) if he has worked for two-thirds of the total number of days in the remainder of the calendar year.
(3) If a worker is discharged or dismissed from service or quits his employment or is superannuated or dies while in service during the calendar year, he or his heir or nominee, as the case may be, shall be entitled to wages in lieu of the quantum of leave to which he was entitled immediately before his discharge, dismissal, quitting of employment, superannuation, or death calculated at the rates specified in sub-section (1), even if he had not worked for the entire period specified in sub-section (1) or sub-section (2) making him eligible to avail of such leave, and such payment shall be made:
(i) where the worker is discharged or dismissed or quits employment, before the expiry of the second working day from the date of such discharge, dismissal, or quitting, and
(ii) where the worker is superannuated or dies while in service, before the expiry of two months from the date of such superannuation or death.
(4) In calculating leave under this section, a fraction of leave of half a day or more shall be treated as one full day's leave, and a fraction of less than half a day shall be omitted.
(5) If a worker does not take the whole leave allowed to him in any one calendar year under sub-section (1) or sub-section (2), any leave not taken by him shall be added to the leave to be allowed to him in the succeeding calendar year:
Provided that the total number of days of leave that may be carried forward to a succeeding year shall not exceed thirty in the case of an adult or forty in the case of a child:
Provided further that a worker who has applied for leave with wages but has not been given such leave in accordance with any scheme laid down in sub-sections (8) and (9) or in contravention of sub-section (10) shall be entitled to carry forward the leave refused without any limit.
(6) A worker may at any time apply in writing to the manager of a factory not less than fifteen days before the date on which he wishes his leave to begin, to take all the leave or any portion allowable to him during the calendar year:
Provided that the application shall be made not less than thirty days before the date on which the worker wishes his leave to begin if he is employed in a public utility service as defined in clause (n) of section 2 of the Industrial Disputes Act, 1947 (14 of 1947):
Provided further that the number of times in which leave may be taken during any year shall not exceed three.
(7) If a worker wants to avail himself of the leave with wages due to him to cover a period of illness, he shall be granted such leave even if the application for leave is not made within the time specified in sub-section (6); and in such a case, wages as admissible under section 81 shall be paid not later than fifteen days, or in the case of a public utility service not later than thirty days from the date of the application for leave.
(8) For the purpose of ensuring the continuity of work, the occupier or manager of the factory, in agreement with the Works Committee of the factory constituted under section 3 of the Industrial Disputes Act, 1947 (14 of 1947), or a similar Committee constituted under any other Act or if there is no such Works Committee or a similar Committee in the factory, in agreement with the representatives of the workers therein chosen in the prescribed manner, may lodge with the Chief Inspector a scheme in writing whereby the grant of leave allowable under this section may be regulated.
(9) A scheme lodged under sub-section (8) shall be displayed at some conspicuous and convenient places in the factory and shall be in force for a period of twelve months from the date on which it comes into force, and may thereafter be renewed with or without modification for a further period of twelve months at a time, by the manager in agreement with the Works Committee or a similar Committee, or as the case may be, in agreement with the representatives of the workers as specified in sub-section (8), and a notice of renewal shall be sent to the Chief Inspector before it is renewed.
(10) An application for leave that does not contravene the provisions of sub-section (6) shall not be refused unless refusal is in accordance with the scheme for the time being in operation under sub-sections (8) and (9).
(11) If the employment of a worker who is entitled to leave under sub-section (1) or sub-section (2), as the case may be, is terminated by the occupier before he has taken the entire leave to which he is entitled, or if having applied for and having not been granted such leave, the worker quits his employment before he has taken the leave, the occupier of the factory shall pay him the amount payable under section 80 in respect of the leave not taken, and such payment shall be made, where the employment of the worker is terminated by the occupier, before the expiry of the second working day after such termination, and where the worker quits his employment, on or before the next payday.
(12) The unavailed leave of a worker shall not be taken into consideration in computing the period of any notice required to be given before discharge or dismissal.
From India, Mumbai
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Dear,
The formula you mentioned is related to the calculation for Gratuity, but with the correct adjustment:
Basic * 15 / 26 x No. of Years worked
In our company, we use the following formula to calculate EL:
= No. of EL balance / 260 days (working days in a year) x Gross salary or CTC (annual)
However, some companies divide the balance leaves by the full year.
Thanks
From India, Delhi
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The formula you mentioned is related to the calculation for Gratuity, but with the correct adjustment:
Basic * 15 / 26 x No. of Years worked
In our company, we use the following formula to calculate EL:
= No. of EL balance / 260 days (working days in a year) x Gross salary or CTC (annual)
However, some companies divide the balance leaves by the full year.
Thanks
From India, Delhi
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Dear K. Saikishore,
Please go through the chapter on salary in the taxation book. Leave encashment is the salary received by an individual for a leave period. It is considered chargeable income whether the individual is a government employee or not. Under section 10(10AA)(i), there is a provision for exemption in the case of leave encashment, depending on whether the individual is a government employee or an employee in another sector.
From India, Mumbai
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Please go through the chapter on salary in the taxation book. Leave encashment is the salary received by an individual for a leave period. It is considered chargeable income whether the individual is a government employee or not. Under section 10(10AA)(i), there is a provision for exemption in the case of leave encashment, depending on whether the individual is a government employee or an employee in another sector.
From India, Mumbai
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