Cite.Co is a repository of information and resources created by industry seniors and experts sharing their real world insights. Join Network
Suppose salary of a person has following components
1) Basic 15000
2) DA 2000
3) other allowance 3000
4) total gross salary 20,000
He has 5 days of earned leave
the employee is retired. Then encashement to be calculated as on whether total gross salary for Rs 20,ooo ie 20000 /26 Days X 5 days Rs 3846 or (BASIC +DA)/26* 5 = 17000/26 x 5 = rS 3269-00 PLEASE EXPLAIN

From United Kingdom, London
Suppose a worker has EL OF 5 days
Basic 12,000-00
DA 5000- 00
OTHER ALLOWANCE 3000-00
NET PRESENT DAYS 20
WEEKLY OFFs 4
EL availed 3
absent 30
------------------------------
total days 30
1) Gross sal = 20000- 20,000/26 x 3(absent days)=20,000-2307.70=17,692.30
2) Gross sal = 20000- 20,000/26 x 3(absent days)- 3000(= 3other allowance)/26 x 3( 3 days el availed) = 20000-2307.70-346.16
in second case i have taken into consideration the deduction of allowance amt for 3 days el AVAILED)
WHICH ON IS CORRECT

From United Kingdom, London
Dear Mohan,
Before reading my answer to your query, I would like you to have a receptive mind to my following observations as a prelude to my answer;okay?
1) Salary is the total remuneration payable to the employees for any wage period as per the contract of employment. In order to retain the employees and to contain the indirect statutory financial commitments of the employer to certain extent, the total salary or gross salary is divided into basic and other allowances. Again these allowances are also in the nature of compensatory and reimbursable depending on the place and the nature of work. Generally compensatory allowances are treated as part and parcel of the salary for the work done by the employees while allowances of reimbursable nature such as conveyance, night shift allowance etc., are considered to be paid for actually attending to work.
2) Normally, the wage period mentioned in the contract of employment would be a month. A month is considered to be comprising of 30 days for the purpose of convenience of calculation and the monthly salary mentioned in the contract of employment would be fully paid irrespective of the actual no. of days in a month.
There is no break-up for the other allowances in your post. Any leave surrendered for cash benefit is the entitled period of paid absence not availed of by the employee for obvious reasons. Had the employee availed the leave, would not you have paid him the gross salary minus the reimbursable allowances? In my opinion, same analogy holds good in calculation of leave encashment.

From India, Salem
This discussion thread is closed. If you want to continue this discussion or have a follow up question, please post it on the network.
Add the url of this thread if you want to cite this discussion.