Dear All,
It is not mentioned either in the Factories' Act or in any other Acts regarding the method of calculation of leave encashment. Some hold the view that in the case of monthly rated employees, to arrive at the daily rate, the monthly rate of salary should be divided by 30 days. Others argue that the monthly rate of salary should be divided by 26 days. I kindly request someone to highlight the correct and justifiable procedure.
Thank you.
From India, Bangalore
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31It is not mentioned either in the Factories' Act or in any other Acts regarding the method of calculation of leave encashment. Some hold the view that in the case of monthly rated employees, to arrive at the daily rate, the monthly rate of salary should be divided by 30 days. Others argue that the monthly rate of salary should be divided by 26 days. I kindly request someone to highlight the correct and justifiable procedure.
Thank you.
From India, Bangalore
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Actually there are laws on leave encashments, see in every shops and establishment act there are decided leaves and there is a provision for carry forward along with cash payments for them. Like for eg in Punjab and Haryana Shops and Establishment Act
Leave- See Indian Labour Laws & Shram Suvidha Simplified
" Every employee who has been in employment for not less than twenty days in a year shall be entitled to one day’s earned leave for every such twenty days:
If an employee is discharged or dismissed from or leaves service during the course of the year he shall be entitled to leave with wages or wage in lieu of un-availed leave.
If an employee does not in any one year take the whole of the leave allowed to him under clause (a), any leave not taken by him shall be added to the leave to be allowed to him in the succeeding year: Provided that—
Subject to any specific agreement between the employer and the employee, the total number of days of leave that may be carried forward to a succeeding year shall not exceed forty in the case of a young person or thirty in any other case;
The provisions of this section shall not operate to the prejudice of any rights to which an employee may be entitled under any other law or under the terms of any award, agreement or contract of service;
Where such award, agreement or contract of service provides for a longer leave with wages or weekly holidays than those provided under this section the employee shall be entitled to only such longer leave or weekly holidays as the case may be.
Leave period in clause (a) shall, when applied for be granted except for a valid reason to be communicated in writing by the employer to the employee within fifteen days of the application: Provided that the leave so refused shall, if applied for again, be allowed during the year.
Notwithstanding anything contained in the above clauses every employee in an establishment shall be allowed with wages seven days casual leave and seven days sick leave in a year."
Now those covered under this act can follow the same parallel while allotting encashment facility
From India, Kolkata
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Leave- See Indian Labour Laws & Shram Suvidha Simplified
" Every employee who has been in employment for not less than twenty days in a year shall be entitled to one day’s earned leave for every such twenty days:
If an employee is discharged or dismissed from or leaves service during the course of the year he shall be entitled to leave with wages or wage in lieu of un-availed leave.
If an employee does not in any one year take the whole of the leave allowed to him under clause (a), any leave not taken by him shall be added to the leave to be allowed to him in the succeeding year: Provided that—
Subject to any specific agreement between the employer and the employee, the total number of days of leave that may be carried forward to a succeeding year shall not exceed forty in the case of a young person or thirty in any other case;
The provisions of this section shall not operate to the prejudice of any rights to which an employee may be entitled under any other law or under the terms of any award, agreement or contract of service;
Where such award, agreement or contract of service provides for a longer leave with wages or weekly holidays than those provided under this section the employee shall be entitled to only such longer leave or weekly holidays as the case may be.
Leave period in clause (a) shall, when applied for be granted except for a valid reason to be communicated in writing by the employer to the employee within fifteen days of the application: Provided that the leave so refused shall, if applied for again, be allowed during the year.
Notwithstanding anything contained in the above clauses every employee in an establishment shall be allowed with wages seven days casual leave and seven days sick leave in a year."
Now those covered under this act can follow the same parallel while allotting encashment facility
From India, Kolkata
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Dear Labour Law Index,
Your reply is certainly useful to me. However, my query pertains to the method of calculation in the case of leave encashment. To determine the daily rate, should the monthly salary be divided by 30 or 26 days? I would appreciate clarification on this matter. Additionally, if there is any supporting document available, it would be even more helpful.
Thank you.
From India, Bangalore
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Your reply is certainly useful to me. However, my query pertains to the method of calculation in the case of leave encashment. To determine the daily rate, should the monthly salary be divided by 30 or 26 days? I would appreciate clarification on this matter. Additionally, if there is any supporting document available, it would be even more helpful.
Thank you.
From India, Bangalore
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Most Appreciated,
There are two ways we can approach this:
1) Actuarial Standards in India: They value leave encashment on a 26-day basis. https://www.google.co.in/url?sa=t&am...RrCaMdpp25AI7g
2) Civil Service Rule 38A, it does take 30 days.
According to me, 26 days is the correct valuation measure.
From India, Kolkata
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There are two ways we can approach this:
1) Actuarial Standards in India: They value leave encashment on a 26-day basis. https://www.google.co.in/url?sa=t&am...RrCaMdpp25AI7g
2) Civil Service Rule 38A, it does take 30 days.
According to me, 26 days is the correct valuation measure.
From India, Kolkata
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There is an old case in the Supreme Court that declared for the purpose of gratuity computation, the daily rate from the monthly rate would be obtained by dividing by 26. This rule has been followed by courts since. Even minimum wage regulations and notifications specify dividing by 26 days.
So, you need to divide by 26 days in your case.
From India, Mumbai
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So, you need to divide by 26 days in your case.
From India, Mumbai
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Dear Mr. Mohan,
For monthly-rated employees, do you pay salary for 30/31/29/28 days? You pay salary based on the total days in the month. For the purpose of Leave Encashment, you take the total days in the month in which Leave Encashment is paid to determine 1 Day's Salary.
For example, if you are paying Leave Encashment in April 2017, take 30 days. Similarly, if you are paying Leave Encashment in May 2017, take 31 days.
From India, New Delhi
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For monthly-rated employees, do you pay salary for 30/31/29/28 days? You pay salary based on the total days in the month. For the purpose of Leave Encashment, you take the total days in the month in which Leave Encashment is paid to determine 1 Day's Salary.
For example, if you are paying Leave Encashment in April 2017, take 30 days. Similarly, if you are paying Leave Encashment in May 2017, take 31 days.
From India, New Delhi
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It would be highly beneficial for me if learned members could enlighten me on how to distribute a salary of Rs 1 lakh per month into allowances and perquisites. I am an Administrative Officer who was recently promoted.
Regards,
Syed Adil Mehdi
From India, New+Delhi
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Regards,
Syed Adil Mehdi
From India, New+Delhi
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I'll try to give a twist to the question here. What are the Heads of Salary (Basic, DA, HRA, Overtime Allowance, Tiffin Allowance, Conveyance Allowance...) that should be considered when deciding the amount to be paid for Leave Encashment?
Learned friends, may you kindly enlighten others, please.
Soumitra Sengupta
From India, Pune
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Learned friends, may you kindly enlighten others, please.
Soumitra Sengupta
From India, Pune
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Don’t pose academic question, pose a case question to help you better.
From India, Mumbai
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From India, Mumbai
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Dear Soumitra,
Please peruse "The Factories Act, 1948" and Shops & Commercial Establishments Act to learn about leave encashment. Fixed salary components of gross salary are considered for leave encashment. Extra time allowance/overtime, tiffin allowance, etc., cannot be part of fixed salary components. What an employee earns while on leave, the same amount he earns at the time of surrendering leave.
Thank you.
From India, New Delhi
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Please peruse "The Factories Act, 1948" and Shops & Commercial Establishments Act to learn about leave encashment. Fixed salary components of gross salary are considered for leave encashment. Extra time allowance/overtime, tiffin allowance, etc., cannot be part of fixed salary components. What an employee earns while on leave, the same amount he earns at the time of surrendering leave.
Thank you.
From India, New Delhi
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Method of calculation of wages.doc
SALARY SHEET CALCULATION.xls