Confusion Over How To Calculate Earn Leave (EL). - CiteHR
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Rajat Joshi
Hr Consulting ,trainer -creative Thinking
Administration And H.r
Sagala Amarnath
Manager - Human Resources
Sr. Executive Hr
+7 Others

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Dear friends,

As far as I know Earned Leave shall be calculated as per the following formula:

Total basic (gross) salary X number of earned leave
Total number of months 30 (or 26) days [this need to be confirmed)
employee worked

for example:

1,20,000 X 15 = 4286
14 30

This is the formula which I knew and read in one post on Citehr as well. But now I have confusion over this. My confusion is:
  • Whether EL should be counted on the basis of Basic Salary or it should be on the basis of Gross Salary.
  • How many month days should we take for its calculation. Whether it should be 26 or 30?

You all are requested to end this dilemma.

Thanks and Regards,


regarding basic salary or gross which to be taken in consideration for calculating amount of leave encashment---law is not clear on this point so u can take any salary,but make it a policy.
salary to be divided by 26 not by 30 for calculation.
j s malk

Dear all, The calculation is different...Is there is any mandatory to confirm that the EL per year should have .........days...confirm it
Dear Malk,
as you have stated salary to be divided by 26 days not by 30 days, 26 days is consider only for Gratuity but about leave ,no where they have written, if yes can u mail me the circulaer copy for dividing 26 days salary.
my email id is

Dear Devender,
Pertaining to ur query, i would like u to go for Basic+Da option,however law is silent on this.
u can calculate it by 26/30 days, go for that in which u have to pay less.
for e.g. if basic is 2300, calculation would be 2300*no. of leave/26 or 2300*21/26=Rs
1858/- if u calculate with 2300*21/30= Rs1610/-
Go for that in which u have to pay less. we are also paying on 30 days, but it is ur wish, both r recommendable.

dear there is no circular on this but to calculate one day wages monthly wages to be divded by 26. even for leave encashment also it should be divided by 26. tks j s malik
i run a charitable institution (manufacturing artificial limbs for disabled) under sec 25 of companies act i.e. no profits / dividends. None of the owners or directors takes a single penny, not even petrol expense.
most of the workers have been taken in more as a welfare measure than necessity and 30% are disabled -about 50% are living on the premises with free accommodation and free electricity (this free electricity consumption accounts for more than 60% of the total consumption of electricity of the institution). Now, I would like to know that in view of the above, should the Industrial Disputes Act be applicable to such an instititution and if so,can exemption be taken? Further reasons are that such Act impedes the scope of charity and drains an institution of this nature. Also, such Act is also misused to extract maximum from the institution thus hindering its charitable objectives further. Also, any Union activity diverts attention from the charitable activities and drains the very minimal resources.
Kindly enlighten.

Dear All,
DEv's first querry was on calculation of earned leave. Earned leave by definition is a leave earned by an employee for working in an organisation for a specific days. So question of calculating EL is therefore on number of days one worked in the organisaton. Lok at the Factories Act 1948 provisions on this.
In view of this question of linking EL with Basic or gross salary does not arise, unless it is for leave enchashment. For leave encashment only Basic pay ( some cases DA also) is only taken into account. HRA, Conveyance etc. is are granted only an employee is granted permission to avail leave. So, for encashment nothing other than Basic need be taken.
As regards Mr. Malik's posting, let me tell you that only for gratuity 26 days is considered as the month as per the statute and for all purposes it is 30 days. I also saw another person telling that any calculation can be made as per the polcy. But remember that such a policy should not be violative of the statute. Hence be careful.
Pl refer to the employee standing ordes of this organisation also, where probably much leniency and relaxation would have been extended to employees earlier. Then better to follow practice rather than creating a conflict, until you serve notice of change of working conditions on the employees.

Thrice I have tried to give detailed answer today, running to 3 paragraphs. But uploading is refused inspite if several trials. I am sorry. Cite hr is becoming a useless site. Very bad to state this.( Let me tell that the contentions of all of you are wrong. Ref. statutes)

Dear all,

Agree with J S Malik's comment. Thank you Sir !. We really appreciate your effort and time in answering the queries on the forum.

You have to decide as a policy whether EL encashment is going to be based on Basic Salary or Gross Salary or CTC.

Would recommend that Basic salary be taken as the base.

Number of days - 30 days. 26 days would be valid if you are considering the worker's F&F.

Best Regards,


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