Dear all, please tell me "how to calculate EARNED LEAVE ENCASHMENT'
From India, Bhubaneswar
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3From India, Bhubaneswar
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Hi, different companies calculate it in different way. most used ways are as follows:- 1) 1 day basic salary X no. of ELs 2) (1 day basic salary + 1 day TA + 1 day DA) X no. of ELs
From India, Delhi
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From India, Delhi
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Why do you need to calculate encashment of earned leave? Are you an HR professional or a management student?
Generally, it depends on the company policy. In some companies, encashment is based on basic and dearness allowances only, while in others, it is based on gross salary.
In my previous company, if you had 30 days of leave, you would be paid for 34 days (26 days equal to 1 month plus 4 days).
I believe this clarifies your query.
From India, Bhubaneswar
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Generally, it depends on the company policy. In some companies, encashment is based on basic and dearness allowances only, while in others, it is based on gross salary.
In my previous company, if you had 30 days of leave, you would be paid for 34 days (26 days equal to 1 month plus 4 days).
I believe this clarifies your query.
From India, Bhubaneswar
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Hi, Leave encashment calculation differs for each company: Calculation: (Basic Salary + DA)/30*Earned leave
From India, Chennai
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From India, Chennai
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Dear, The earned leave encashment caliculation formula as per factories act Basic+DA*No.of eligible ELs/26
From India, Secunderabad
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From India, Secunderabad
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Hello,
As per the Factories Act, it is:
(Basic+DA) / 26 * Number of Encashment Days.
However, this is flouted by most companies for their benefit as they recalibrate the rule as follows:
(Basic+DA) / 30 * Number of Encashment Days.
Trust this is clear.
Warm Regards,
SR Banaji
Resolve Business Solutions
From India, Bangalore
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As per the Factories Act, it is:
(Basic+DA) / 26 * Number of Encashment Days.
However, this is flouted by most companies for their benefit as they recalibrate the rule as follows:
(Basic+DA) / 30 * Number of Encashment Days.
Trust this is clear.
Warm Regards,
SR Banaji
Resolve Business Solutions
From India, Bangalore
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Companies have their own policies for leave encashment as some companies do not allow leave encashment. Therefore, if you are in HR, it is better to decide how to calculate it yourself.
If you want examples for calculation, some companies encash pending leaves by paying 50% of the daily salary, while others only encash leaves if 50% of the allowed leaves are pending.
From India, Lucknow
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If you want examples for calculation, some companies encash pending leaves by paying 50% of the daily salary, while others only encash leaves if 50% of the allowed leaves are pending.
From India, Lucknow
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Leave encashment should be done on gross salary instead of basic salary, calculation formula should be Gross Salary/26 * no. of leave/leaves. Thanks & Regards, From, Sumit Kumar Saxena
From India, Ghaziabad
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From India, Ghaziabad
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In calculation for Leave Encashment (Gross/26*no. of leave) what does 26 mean? Thank You
From India, undefined
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From India, undefined
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26 means the working days for the month bearing 30 or 31 days in case of 28 or 29 days 26 will be replaced by 24. Thanks & Regards, from, Sumit Kumar Saxena
From India, Ghaziabad
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From India, Ghaziabad
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Leave encashment should be done on gross salary instead of basic salary. The calculation formula should be Gross Salary/26 * no. of leave/leaves.
I would appreciate it if it can be clarified whether the leave encashment is done on gross salary or basic+da with the appropriate act as per the Factory Act 1948.
From United Kingdom, London
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I would appreciate it if it can be clarified whether the leave encashment is done on gross salary or basic+da with the appropriate act as per the Factory Act 1948.
From United Kingdom, London
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If CTC = 15000 and Earned leave = 20 Deduction: Employee PF- 956 + ESIC- 234 = 1190 Employer PF- 996 + ESIC- 635 = 1631 Total = 2821 CTC- 15000-2821 = 12179 12179*12 /365= 400.5 400.5*20= 8010
From India, Panjim
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From India, Panjim
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All salaried have different type of leaves namely: Sick Leave, Casual Leave, Earned/Privilege leave, etc. If employees take lesser leaves than they are eligible for, most employers encash the left over leaves either annually or at the time of leaving the company. Of all types of leaves only earned or privilege leave is encashable.
Tax on Leave Encashment:
The tax of leave encashment is dependent on if you are government or private sector employee, or if you are encashing it at the time of retirement or mid-way. We take each case separately.
Tax Calculation:
The tax exemption would be minimum of the below 4 points:
Amount received as leave encashment – Rs 6 Lakhs
Maximum cap as stated by government – Rs 3 Lakhs
Last 10 months average basic salary & dearness allowance before leaving the job – Rs
2,50,000 (Rs 25000 X 10)
Cash equivalent of the leave balance, subject to maximum of 30 days for each completed year of service – Rs 1,37,500 (as per calculation below)
Earned leave eligibility as per above rule = 30 days X 25 = 750 days
Leaves used = 585 days
Leaves eligible for encashment (as per above rule) = 750 – 585 = 165 days (5.5 months)
Cash equivalent = 5.5 X 25000 = Rs 1,37,500
Tax exemption = Rs 1,37,500
Taxable component = Rs 6,00,000 – Rs 1,37,500 = Rs 4,62,500
From India
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Tax on Leave Encashment:
The tax of leave encashment is dependent on if you are government or private sector employee, or if you are encashing it at the time of retirement or mid-way. We take each case separately.
Tax Calculation:
The tax exemption would be minimum of the below 4 points:
Amount received as leave encashment – Rs 6 Lakhs
Maximum cap as stated by government – Rs 3 Lakhs
Last 10 months average basic salary & dearness allowance before leaving the job – Rs
2,50,000 (Rs 25000 X 10)
Cash equivalent of the leave balance, subject to maximum of 30 days for each completed year of service – Rs 1,37,500 (as per calculation below)
Earned leave eligibility as per above rule = 30 days X 25 = 750 days
Leaves used = 585 days
Leaves eligible for encashment (as per above rule) = 750 – 585 = 165 days (5.5 months)
Cash equivalent = 5.5 X 25000 = Rs 1,37,500
Tax exemption = Rs 1,37,500
Taxable component = Rs 6,00,000 – Rs 1,37,500 = Rs 4,62,500
From India
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Hi, I am calculating Earned Leave manually, so please let me know how we can calculate if an employee consumed his leaves - 7 CL & 7 SL and Holidays (company is giving 10-11 Holidays per year). How will we calculate EL in this case.
As every 20 days present generate an EL, how do we calculate these 20 days? Are Sundays, Holidays, and their own leaves included in these 20 days or not? Please explain fully. I got confused after reading some responses that 240 days are there to calculate EL. How is it calculated and fixed as 240? Please mention if there is any formula.
From India, New Delhi
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As every 20 days present generate an EL, how do we calculate these 20 days? Are Sundays, Holidays, and their own leaves included in these 20 days or not? Please explain fully. I got confused after reading some responses that 240 days are there to calculate EL. How is it calculated and fixed as 240? Please mention if there is any formula.
From India, New Delhi
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FACTORY ACT 1948.xls
LEAVE ENCASHMENT NOT INCLUDED IN WAGES FOR P. F. CALCULATION.pdf