Dear Team Members,
In my company, there is a policy of Leave Encashment for 30 days a year. However, if any employee is absent for any day in a month except the weekly off and festival holiday, then the company deducts the salary for the day, and the same is compensated through leave encashment by giving only basic pay at the end of the year. Although his Appointment Letter clearly stated that he will enjoy the annual leave as per company policy. As an HR personnel, when I described the situation to my director that CTC computes with statutory benefits and at the time of encashment, we are giving only basic pay at that time he did not agree with me. Could you please provide any ACT or Rule as per shops and Establishment so that I may be able to implement the leave policy apart from CTC in my company. CTC Computations are given below for your kind perusal.
COMPUTATION PERCENTAGE P.M. P.A. Basic Per month 10000 120000 HRA Per month 1500 18000 Conv. Allow. Per month 1500 18000 Total GROSS Per month 13000 156000 LESS Employees EPF 12% 1200 14400 ESIC 0.75% 98 1170 P. Tax AS PER SLAB 110 1320 Employees Net Take Home 11593 139110
EMPLOYER CONTRIBUTION Per month PF % 12.00 1200 14400 ESI % 3.25 325 3900 BONUS % 12.50% 1250 15000 LEAVE ENCASHMENT 8.33% 833 9996 TOTAL 3608 43296 CTC P.M. & P.A. 16608 199296
From India, Kolkata
Acknowledge(0)
Amend(0)
In my company, there is a policy of Leave Encashment for 30 days a year. However, if any employee is absent for any day in a month except the weekly off and festival holiday, then the company deducts the salary for the day, and the same is compensated through leave encashment by giving only basic pay at the end of the year. Although his Appointment Letter clearly stated that he will enjoy the annual leave as per company policy. As an HR personnel, when I described the situation to my director that CTC computes with statutory benefits and at the time of encashment, we are giving only basic pay at that time he did not agree with me. Could you please provide any ACT or Rule as per shops and Establishment so that I may be able to implement the leave policy apart from CTC in my company. CTC Computations are given below for your kind perusal.
COMPUTATION PERCENTAGE P.M. P.A. Basic Per month 10000 120000 HRA Per month 1500 18000 Conv. Allow. Per month 1500 18000 Total GROSS Per month 13000 156000 LESS Employees EPF 12% 1200 14400 ESIC 0.75% 98 1170 P. Tax AS PER SLAB 110 1320 Employees Net Take Home 11593 139110
EMPLOYER CONTRIBUTION Per month PF % 12.00 1200 14400 ESI % 3.25 325 3900 BONUS % 12.50% 1250 15000 LEAVE ENCASHMENT 8.33% 833 9996 TOTAL 3608 43296 CTC P.M. & P.A. 16608 199296
From India, Kolkata
Acknowledge(0)Amend(0)
First of all, not permitting an employee to take leave or deducting salary when he is on authorized leave is bad in law. The law has provided certain employee benefits, and these are for the employees to avail. Leave is one among them. No Act has any provision regarding encashment of leave during the service, but all the Acts say that unavailed leave shall be encashed at the time of discharge, at the time of leaving the service only. Therefore, the basic objective of granting leave has been defeated in your company.
Secondly, at the time of encashment, the salary should include the total salary and not the basic alone. Nowhere in the law is it said that only basic wages will qualify for encashment of leaves.
But 30 days' leave a year is too much and beyond what is provided under the law. The law governing the leaves in a shop/commercial establishment being a state subject, you have to refer to your state Act and find what is the total leaves that are permitted to an employee, and which all types of leave can be surrendered. Anyway, no state law has a provision of 30 leaves in a year and that all the 30 leaves can be surrendered or encashed.
From India, Kannur
Acknowledge(0)Amend(0)
4764Secondly, at the time of encashment, the salary should include the total salary and not the basic alone. Nowhere in the law is it said that only basic wages will qualify for encashment of leaves.
But 30 days' leave a year is too much and beyond what is provided under the law. The law governing the leaves in a shop/commercial establishment being a state subject, you have to refer to your state Act and find what is the total leaves that are permitted to an employee, and which all types of leave can be surrendered. Anyway, no state law has a provision of 30 leaves in a year and that all the 30 leaves can be surrendered or encashed.
From India, Kannur
Acknowledge(0)Amend(0)Engage with peers to discuss and resolve work and business challenges collaboratively. Our AI-powered platform, features real-time fact-checking, peer reviews, and an extensive historical knowledge base. - Register and Log In.
PF Contribution on Leave Encashment - Clarification by EPFO.pdf
EPFO Circular Leave Encashment.jpg