usha_30096 Started The Discussion:
Can you please clarify about yearly calculation of Earned Leave Encashment. We have taken gross salary / 26 X no. of days. Is it correct ?
In order to be able to help you calculate encashment of annual leave I need you to give me the following information
•According to your Company Policy, your annual leave is in calendar days or working days, cause it makes a lot difference when calculating
•Consider different positions have different annual leave entitlements
•When calculating benefits and entitlement what do u use, basic salary or gross salary it makes a difference.
•What is your annual leave carrying forward policy in your organization
•I assume that you do this exercise is it done in 31st December
•The date in which you start Calculation
•Total No of annual leave earned
Send me this information and I will send you the matrix for calculating your annual leave encashment
We are not to encash the earned leaves yearly under any of the Act but if the employee do not have any objection & is interested in getting enashment of EL yearly & if the employer also wants to pay then in my opinion your method of calculation is not at all objectionable.
Opinion/ comments submitted as requested.
Sr. Associate (LL & IR)
Skylark Associates, Gurgaon (Haryana)
(Labour Law Consultants)
Office: 311, AKD Tower, Sector 14, Gurgaon
(M) 09810405361 (O) 0124-4264449
if the company has a policy of providing privillege leave or earned leave during calender year, they may opt for the same. But the factories act does not insist the employer to pay such encashment. it is not the statutory obligation on the part of the employer to pay such encashment to the employee
For earned leave encashment, we should take basic salary ( not gross salary) for a month having 30 days.
For.eg A person who has totally worked 120 days, He is eligible to get 6 days for encashment. his basic salary for a day to be derived and which should be multiplied by 6 days.
Basic salary Rs.800 X 6 days = 4800/-
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