Dear All,
I am working with a manufacturing company in gurgaon. Till now we have been calculating EL on Gross salary, but now our directors are saying us to calculate EL on Basic. Kindly help me in this.
Harry
From India, Delhi
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5I am working with a manufacturing company in gurgaon. Till now we have been calculating EL on Gross salary, but now our directors are saying us to calculate EL on Basic. Kindly help me in this.
Harry
From India, Delhi
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EL shall be applicable on gross salary, there is always reasoning and rational on basis on any law. suppose if the employee is comming to office he shall get the complete slary including all allowance viz HRA, Conveyance, Medical etc. and if he on leave then whether he will not pay HRA or other allowance. it should be on gross slary instead of Basic.
From India, Delhi
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From India, Delhi
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it can be paid in any foam mean it can be on basic & gross both but the taxability would be applicable on gross because as per law exemption can be given only on basic not on gross.
From India, New Delhi
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From India, New Delhi
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Dear Harry,
It is a matter of confussion. But EL is long time calculated in basic. Why?. Here is the facts.
Basic >= Minimum wages per day * Total No of days present. i.e if M.W is 170 then basic per month is 4420.
So all other allowances that you give him is actually helping him to come to this company for working. Eg: HRA, In order for him to come and work in a n organisation, he needs to have shelter. So you pay him for his shelter. So its an added money you give him to come and work. Only basic wages is the salary that you give for his work done.
So if an employee is on leave then he has not worked. So you automatically cut his allowance to. So whay pay him his house rent if he didn'e come for work. Hope I was not arrogant towards the employees side.
Regards,
Yashwanth R
HR-Associate,
SKY technologies
From India, Bangalore
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It is a matter of confussion. But EL is long time calculated in basic. Why?. Here is the facts.
Basic >= Minimum wages per day * Total No of days present. i.e if M.W is 170 then basic per month is 4420.
So all other allowances that you give him is actually helping him to come to this company for working. Eg: HRA, In order for him to come and work in a n organisation, he needs to have shelter. So you pay him for his shelter. So its an added money you give him to come and work. Only basic wages is the salary that you give for his work done.
So if an employee is on leave then he has not worked. So you automatically cut his allowance to. So whay pay him his house rent if he didn'e come for work. Hope I was not arrogant towards the employees side.
Regards,
Yashwanth R
HR-Associate,
SKY technologies
From India, Bangalore
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(Fact Checked)-The calculation of Earned Leave (EL) based on Basic salary is a common practice in many organizations as per labor laws. EL should be calculated on Basic salary, not Gross salary. (1 Acknowledge point)
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Dear Harry,
Calculation of leave encashment is always on basic salary because other components are supporting to Basic Salary , So no need to pay other supportive components.
Agree with Mr. Yashwanth,
Chill HR
https://www.facebook.com/HRGang
From India, Gurgaon
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Calculation of leave encashment is always on basic salary because other components are supporting to Basic Salary , So no need to pay other supportive components.
Agree with Mr. Yashwanth,
Chill HR
https://www.facebook.com/HRGang
From India, Gurgaon
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(Fact Check Failed/Partial)-[The user's reply is incorrect. Leave encashment should be calculated on the gross salary, not just the basic salary. All components of the salary, including basic salary and other allowances, should be considered when calculating leave encashment. It is essential to adhere to legal requirements and company policies in this regard.]
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let take that I am on leave for four days & apply for El for these 4 days leaves. here I will get entire four day of leave which I believe will be equal to my four days of gross salary(FULL SALARY) not basic. my point is when it comes to enchantments your are telling me to do on Basic but for purpose of leave I take it as full day salary. This is wat I am not been able to understand.
From India, Delhi
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From India, Delhi
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(Fact Check Failed/Partial)-The calculation of earned leave should be based on Basic wages as per the Shops and Establishments Act and the Payment of Wages Act. Kindly consider the company policy & legal requirements.
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Dear Harry,
What i suggested you in my last post is the same what the practice maximum organisations are following.
While working period if one need EL then means full day salary, not basic.
But leave encashment is entirely depend upon the company to company.
Case 1 : If the company policy says that company will deduct / pay notice period on basic the leave encashment must be on basic salary.
Case 2 : If notice period deduction / Payment will be on Gross Salary then leave encashment must be on Gross salary only.
Policy of leave encahsment is totally based upon the notice period, and that must be well defined at the very beginning with the office policy, not at the time of encashing leaves and searching the way out.
Chill HR !!
https://www.facebook.com/HRGang
From India, Gurgaon
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What i suggested you in my last post is the same what the practice maximum organisations are following.
While working period if one need EL then means full day salary, not basic.
But leave encashment is entirely depend upon the company to company.
Case 1 : If the company policy says that company will deduct / pay notice period on basic the leave encashment must be on basic salary.
Case 2 : If notice period deduction / Payment will be on Gross Salary then leave encashment must be on Gross salary only.
Policy of leave encahsment is totally based upon the notice period, and that must be well defined at the very beginning with the office policy, not at the time of encashing leaves and searching the way out.
Chill HR !!
https://www.facebook.com/HRGang
From India, Gurgaon
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(Fact Check Failed/Partial)-The user's reply contains inaccuracies. Leave encashment should generally be based on the basic salary, not the gross salary. It is important to adhere to legal requirements and company policies. Ensure clarity in the policy from the beginning.
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Dear Harry, Good Morning...!!! All leaves are always calculated on Basic + DA, not on Gross Salary... Leave Encashment = Basic + DA /30 X No. of Leaves. It includes SL, PL & CL. Regards, Vani M HR
From India, Bangalore
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From India, Bangalore
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(Fact Check Failed/Partial)-The user's reply is incorrect. According to the Shops and Establishments Act, Earned Leave is calculated on the basis of Gross Salary, not Basic + DA.
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Dear Vani,
Are you sure that "It Includes SL, PL & CL"??
Only EL or we can say PL (Earned Leaves or Privilege Leave) will encash not CL (Casual Leaves) and SL (Sick Leave) if i am not mistaken.
Chill HR !!
https://www.facebook.com/HRGang
From India, Gurgaon
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Are you sure that "It Includes SL, PL & CL"??
Only EL or we can say PL (Earned Leaves or Privilege Leave) will encash not CL (Casual Leaves) and SL (Sick Leave) if i am not mistaken.
Chill HR !!
https://www.facebook.com/HRGang
From India, Gurgaon
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(Fact Check Failed/Partial)-[The user's reply is incorrect. Leave encashment is typically based on the Basic salary, not Basic + DA. Only EL (Earned Leave) is usually encashed, not SL (Sick Leave) or CL (Casual Leave). It's important to verify company policies and applicable laws for precise calculations.]
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There had been repeated posts on this subject.Detailed discussions have taken place in this forum on this subject
However I am repeating certain points as it has come up for discussion once again
1. When an employee is availing leave whether it is earned leave or casual leave or sick leave, his full salary is given. If an employee 's basic salary is Rs 1000 and this other allowances are Rs 1000, then he gets Basic plus other allowances full when he or she avail leave with pay
2. When an employee gets encashment of leave,then generally Basic plus DA is given The argument here is that when an employee avails encashment his HRA and other allowances are already given in terms of salary. The logical argument is there is no need to pay the same amount twice.
From India, Chennai
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However I am repeating certain points as it has come up for discussion once again
1. When an employee is availing leave whether it is earned leave or casual leave or sick leave, his full salary is given. If an employee 's basic salary is Rs 1000 and this other allowances are Rs 1000, then he gets Basic plus other allowances full when he or she avail leave with pay
2. When an employee gets encashment of leave,then generally Basic plus DA is given The argument here is that when an employee avails encashment his HRA and other allowances are already given in terms of salary. The logical argument is there is no need to pay the same amount twice.
From India, Chennai
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(Fact Checked)-The user's reply contains accurate information regarding the calculation of leave encashment based on Basic and DA. The explanation provided is correct. (1 Acknowledge point)
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(Fact Check Failed/Partial)-EL should be calculated on Basic salary, not Gross. As per the law, it is based on Basic to ensure a fair calculation and comply with legal requirements.