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Hi Seniors, How should we calculate earned leave? on gross salary or on basic part. Regards, Ritika
Ritika.S.C: on monthly gross salary only. Quite a few firms calculate it on the basic, but that leads to employee perception issues.
Please refer your appointment letter or your leave policy to have a better understanding. If you do not have any, please get it done on urgent basis. With regards to your query my view/opinion is that if the employee would have availed the leave during employment then the employer would have paid him his gross salary so for encashment why to pay basic. This is purely my view
The enactment applicable to the establishment describes number of annual/earned leave and it’s rate.... The standing orders/leave policy can provide superior benefits but not inferior...
The number of annual/earned leave is defined in enactment applicable to establishment e.G. Shops and Commercial Establishment Act and rate is also defined in it .
Most likely is@ monthly wages ..
The leave policy can offer superior benefits but not inferior

I erred! I meant to say its on monthly basic only and quite a few firms calculate it on the gross and that leads to employee perception issues
As some members rightly stated; when the employee takes PL say for one month, he full salary / gross/net salary is paid & not the Basic. Some Cos. curtail this benefit by paying on Basic.
The Leave Rules can provide Superior benefit rather than inferior benefit when it comes to PL encashment and it can be paid on current Gross salary (which includes other applicable allnces.
Hope, other Sr, members will provide correct Rule/practice as there is difference in some Cos. paying only on Basic.

Dear Ritika.S.C,

Your query seems to me, not properly framed or your concept of leave is not clear to you. I have not understood what you want to say.

I am equally confused reading some of replies.

Is your question on encashment of leave or salary on leave granted?

Answers for both are same. You need to be in shoes of employee and you will get the answer. Will you accept the salary for leave at basis only?

To any establishment or company either Shops & Estb. Act or Factory Act or Mines Act or Docks workers Act is applicable and the earned leave is governed under those Acts. All those Acts are protecting the interests or rights of employees. Those Acts can not say to pay leave salary on Basic only.

I am giving the provisions under Factory Act and Bombay Shops & Estb Act verbatim as under:

Factories Act Section 80: Wages during leave period.—

(1) For the leave allowed to him under 1[section 78 or section 79, as the case may be,] a worker 2[shall be entitled to wages] at a rate equal to the daily average of his total full time earnings for the days on which 3[he actually worked] during the month immediately preceding his leave, exclusive of any overtime and bonus but inclusive of dearness allowance and the cash equivalent of the advantage accruing through the concessional sale to the worker of foodgrains and other articles.

Bombay Shops and Estb. Act Section 36: Pay during leave--

Every employee shall be paid for the period of his leave at a rate equivalent to the daily average of his wages for the days on which he actually worked during the preceding three months, exclusive of any earnings in respect of overtime.

In our view this should be on gross monthly pay. Leave encashment on basic salary is not correct approach.
Dear Ritika, EL encashment calculate always on current Basic.and encashment formula is. Current Basic*No.of EL/26

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