Encashment of leave refers to the facility to surrender the unavailed leave either periodically or on the termination of employment for cash benefit in respect of an employee. Not all kinds of leave are covered by this arrangement but any leave of accruing nature like E.L, P.L or Annual Leave with Wages as per the respective establishment-specific law that too on termination alone and it is a statutory payment to be reflected in the F&F settlement. In practice, most of the employers permit it every year at the request of their employees. The money value of surrender leave should be equal to the amount of salary the employee would have received but for such a leave. In other words, the gross salary payable minus certain allowances like being paid to facilitate his actual work like conveyance allowance, heat allowance, night shift allowance, washing allowance and the like should be paid.
Your second question seems vague to me. Better, refer the A.P. Govt. Labor Department web.
9th February 2018 From India, Salem
Would like to confirm the following with regard to Leave encashment:
(a) An employee starts earning leave @ 1.25 days/ month from date of joining, only not allowed to utilise EL during probation. Assuming as per company policy probation is 6 months and in case the employee quits after serving 4 months ( EL = 1.25x 4 = 5days), this needs to be paid to him/ her at time of F&F. Is this mandatory.
(b) For the companies that follow a 5 day work routine, can we follow the following formula while calculating the leave encashment amount:
Last drawn gross salary/ 22 X Earned leave balance.
Would request your inputs on the above two points.
12th February 2018 From India, Visakhapatnam
(a) A "Probationer" is also a regular employee undergoing an initial phase of his service of a definite duration as fixed in the contract of employment only for the purpose of assessment of his suitability to the job by the employer. Therefore, so far as eligibility and entitlement of statutory service benefits like leave, holidays etc., are concerned, no law applicable to the establishment makes any differentiation in respect of employees as probationer, confirmed, contractual and the like. If there is no statutory condition in the establishment-specific law as to availment of E.L after the lapse of a particular period, the refusal to grant E.L to an employee solely on the ground of his probation is certainly illegal. In any case of termination of employment, the E.L at the credit of the concerned employee's leave a/c should be included in his/her F&F settlement of dues. It is mandatory.
(b) Whatever the working pattern of the establishment like 5-Day week or 6-Day week, the holidays are paid holidays only. Therefore, for the sake of calculation of cash value of unavailed E.L, dive the Gross salary by 30.
13th February 2018 From India, Salem
Thankyou very much for the clarifications.
14th February 2018 From India, Visakhapatnam