Leave Encashment Calculation Basis - CiteHR
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I work as an HR in a Engineering Company in Kolkata.
We have a system of doing leave encashment of any Privilege Leave which goes above 60days at the end of Financial year for oue Employees. The amount becomes taxable in hands of our Employees...
I would like to know If the employer company wants to pay leave encashment to its employees what would be the basis of calculation. Say number of leaves available for encashment to employee= 25 days.
So, is the calculation like: (Basic salary per month)*12*25 days/365 = Amount of leave encashment.
Is this in order? “

Dear Friend,
(I have copied from another post of mine)
There are two ways of calculation.
Some companies pay leave encashment on Basic+DA (Basic Pay) and some pay on gross salary. Please do refer historical data of your Organisation to avoid any unnecessarily chaos in your Organisation. It's calculated as follows:-
Considering an employee's gross salary is Rs. 20,000 and he has 15 ELs/PLs credit in his leave account. He will be paid Rs. (20,000/26=769.00) (769x15)=Rs. 11535.

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