Is there any act stating that leave encashment in India has to be on gross wages? Is any such act in discussion in the parliament?
From India, New Delhi
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2From India, New Delhi
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Dear Kohsheen Please peruse The factories Act 1948 & relevant State Rules & respective Sate Shops & Commercial Establishments Act & Rules
From India, New Delhi
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From India, New Delhi
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In my country, leave encashment is based on the basic salary/wages. In a year, one is entitled to 12 monthly wages, given that your pay is based on a month. In other countries, there is what is referred to as the 13th cheque, which is basically a bonus at the end of the year. If you base leave encashment/commutation on gross pay, then you may find yourself paying housing and transport allowances more than 12 times/months in a year.
I do not know about the laws related to such in India, but common practice would be that benefits such as termination, retirement, leave, overtime are calculated based on basic pay unless otherwise specifically stated in your employment agreement or labor laws.
From Mauritius, undefined
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I do not know about the laws related to such in India, but common practice would be that benefits such as termination, retirement, leave, overtime are calculated based on basic pay unless otherwise specifically stated in your employment agreement or labor laws.
From Mauritius, undefined
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If ADA is paid along with the basic salary, both Basic and ADA or DA should be calculated for payment towards leave salary. Allowances need not be considered for calculation. A Basic Salary cannot be reduced from a person's salary in his career in the organization, but allowances can vary.
Basic Salary and ADA are calculated for PF, Bonus, and Ex-Gratia payments. Not other allowances which are included in Gross Salary. Refer also to the Wages Act for more clarity.
From United Kingdom, Oxford
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Basic Salary and ADA are calculated for PF, Bonus, and Ex-Gratia payments. Not other allowances which are included in Gross Salary. Refer also to the Wages Act for more clarity.
From United Kingdom, Oxford
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Dear friends,
For the sake of a perspicacious analysis and a free discussion on the subject matter, I think that let us first set aside the laws relating to wages and compensation for the inclusion or exclusion of certain allowances in the total payouts to an employee by the employer under the contract of employment. This is dependent mostly upon the purpose/objective of such laws. Wages/salary to an employee is the total value of the monetary consideration payable for his work/service. Bifurcation of this wages/salary into basic and allowances is an administrative exercise to facilitate the smooth mobilization of labor as well as a reduction in the consequential indirect financial commitment of the employer. Therefore, allowances form an integral part of the wages/salary structure unless they are in the form of compensation for the expenses defrayed by the employee because of the special nature of his duty/job.
Coming to encashment of leave, it is a concession conferred upon the employee for not availing of a certain type of statutory leave that can be accumulated to a certain limit either periodically by organizational practice/convention or on the termination of his employment. As far as I am aware, no Indian Labor Law provides for the periodical surrender of leave for cash benefit, though the cash payment of the unavailed portion of certain leave is made compulsory on the termination of employment. Thus, by forgoing his leave, the employee helps the continuous workflow of the employer who otherwise has to engage a substitute. Therefore, in the case of surrender of the unavailed portion of leave at his credit, the employee is entitled to all the heads of his salary components other than those in the nature of specific allowances which could be excluded if he is actually absent like traveling, lunch/tiffin, heat allowances as if he had been present for work.
From India, Salem
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For the sake of a perspicacious analysis and a free discussion on the subject matter, I think that let us first set aside the laws relating to wages and compensation for the inclusion or exclusion of certain allowances in the total payouts to an employee by the employer under the contract of employment. This is dependent mostly upon the purpose/objective of such laws. Wages/salary to an employee is the total value of the monetary consideration payable for his work/service. Bifurcation of this wages/salary into basic and allowances is an administrative exercise to facilitate the smooth mobilization of labor as well as a reduction in the consequential indirect financial commitment of the employer. Therefore, allowances form an integral part of the wages/salary structure unless they are in the form of compensation for the expenses defrayed by the employee because of the special nature of his duty/job.
Coming to encashment of leave, it is a concession conferred upon the employee for not availing of a certain type of statutory leave that can be accumulated to a certain limit either periodically by organizational practice/convention or on the termination of his employment. As far as I am aware, no Indian Labor Law provides for the periodical surrender of leave for cash benefit, though the cash payment of the unavailed portion of certain leave is made compulsory on the termination of employment. Thus, by forgoing his leave, the employee helps the continuous workflow of the employer who otherwise has to engage a substitute. Therefore, in the case of surrender of the unavailed portion of leave at his credit, the employee is entitled to all the heads of his salary components other than those in the nature of specific allowances which could be excluded if he is actually absent like traveling, lunch/tiffin, heat allowances as if he had been present for work.
From India, Salem
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