Kindly help me out with the following queries :
IF any employee's PL is 30 for the year 2017-2018 and for the current year 2018-2019 , again 18 PL s is added , total PL would be 48.
Now tell me , that how much PLs can be encashed as per Labour Law, there:
a. Only Half of PLs which are accumulated upto the last year. like Half of 30
b. Half of Full Pls which are accumulated to the current period also. like half of 48
c. the leaves encashment are based on Basics or Gross . if salary is increased in the current month, will it be included for the leave encashment or the same will be done on the last year Gross salary.
kindly answer the above queries asap.
The leaves encashment are based on Basics or Gross it is depends on company's leave policy
Some Organization give on (basic+DA+Other benefit) which is similar / near about Gross pay & some org give on Gross
As per rules which we follow, will pay on Gross as well will give 25 Pl of year & SL can transfer & merge with PL by end of the year.
Up to 36 PL accumulated & rest of PL can en-cash by employee during his service. Time of F&F there is only available PL can en-cash as a part of F&F
if f & f is not the case, the employee wants to en cash the leaves in emergency then what is the policy and how many leaves will be en cashed.
and one more query if the gross salary is increased after the annual increment , the en cashment will takes place on the last salary or new salary
Encashment of leaves is purely on the basis of company policies, in our company we are doing encashment on the basis of basic salary. Also if employee get appraisal than encashment would be according to the new salary . Employee can en-cash the balance leaves at the time of FNF (only PL). If in case on any emergency if company policy is allowing than half of the leaves can en-cash.
Leave encasement is stipulated in Factories Act as well as Shop and Establishment Acts of respective states.
Employer may frame rules to provide more than stipulated but Min is what is mandated.
Kindly check same for your state.
Col.Suresh Rathi
It is high time we take a relook on the leave policy. Why have multiple types of leaves and detailed rules and procedure? In earlier days there used to be timekeepers who used to enter the attendance data, leave calculation etc. But with the advent of modern organisations with more user-friendly provisions and IT based software, it is high time we forgo the old notion and embrace the newer perspective of simplified rules, by having only one kind of leave with set limits of annual accretion, accumulation & encashment. I know it is impossible to change over in the existing organisations and could only be tried in the newer organisations springing up. Also, there is a variety of legislation like Factory Act 1948 speaking of Annual leave, ESI Act speaking of sickness benefit, Certified Standing Orders speaking of a variety of admissible leaves, the Contract Labour standard conditions as per Section 12 thereof all have to be reckoned. So that is why I am suggesting for a review of this cumbersome provision.
Leave Encashment is always processed at the time of full and final settlement. However,some companies also choose to encash it at the end of each year. It depends on how employee centric the company is. As per Delhi - Shops & Establishment Act, Leave encashment is done on Basic Salary and a maximum of 45 leave can be accumulated in 3 years. Beyond 45 days PL's also will lapse.
Shweta Gehlot
Though the Law allowed EL leaves to employees.
There is no Provision in the Factory Act about Leave encashment on Gross or Basic +DA.
Factory Act says about Leaves 30 Leave can be accumulated more than that can be encashed.
But leave rules are decided by employer for workers During the Negotiation and fix in the settlement which will be practice for henceforth.
Nanasaheb Kolage
What is base for 45 days I mean to provision in the Law?
All that I see here -make me feel good. Thank you !
Factories Act limits accumulation of PL to 30 days and silent on encashment. Hence it all depend on company's policy how to treat and make payment. Accumulation limit also can be enhanced as a welfare measure, as it will be helpful to get a lumpsum amount at the time of retirement after long service.
Leave Encashment during service can be on basic salary.
Leave encashment on separation (with full and final settlement) should be on total earnings (gross salary) as provided in the Shops & Establishment Acts.
T Maheswaran
Dear Anonymous,
I referred to Jurisdiction of the Authority, Point No. 22 (1A) (i) - Leave of Delhi Shops and Establishment Act which says
(1A) (i) Privilege leave to which an employee is entitled under clause (a) of sub-section (1) or
under any such law, contract, custom or usage, award, settlement or agreement as is referred to
in section 3, or any part of such leave, if not availed of by such employee, shall be added to the
privilege leave in respect of any succeeding period to which he is so entitled to, however, the total
period of such privilege leave which may be accumulated by such employee shall not at any one
time exceed three times the period of privilege leave to which he is entitled after every twelve
months’ employment under that clause or under such law, contract, custom or usage, award,
settlement or agreement.
Dear all,
Every company has its own policy whether Leave encahment will payout either @ Gross or Basic, but what is impact as per income tax.
if calculation is on Basic its is totally exempted upto 10 lac for whole life
if calculated on Gross then rest than basic will be taxable.
for example 25 days leave encahment
Basic= 15000
15000/30*25=12500 is totaly exempted in income tax up to limit of 10 lac
Gross = 35000 (other than basic= 20000)
20000/30*25=16667 is taxable.
same will reflect on Form 16.
Leave encashment has to pay on Gross Salary, any policy made by company has limited up to company.
Normally it is on basic salary.
Calculation should be from the present Basic+DA salary as per the Law...
Encashment of PL Should be done on Gross salary instead of Basic +DA
Thanks & Regards,
Sumit Kumar Saxena
As per Labour law EL should be credited for 20 Physical working days = 1 EL, how it comes. Pls explain
Dear All,
As per Rules , Payment should be done Gross Salary.
One more things can we lapse the PL in case it crossed the carry forward limit as stipulated in company policy.
Carry Forward limit is 30 as per Factory Act, After 30 all leave (30+) should be paid.
Is it mandatory to allow leave encashment ? Is there any law which binds to pay leave encashment if leave is not granted ? Can anyone explain ?
In Karnataka shops & Establishments - during F & F (Full n final settlement), is it compulsory to encash 30 days of Annual Leave or it can be at employer discretion say 15 days of encashments during exits.
Please suggest..!
Dear Asharao,
As per rules, you have to make payment of all leaves earned by employees. Paid leave will be calculated as 1 for 20 working days. After calculating leaves you have to make payment of all those leave.
As what i had learnt from my Experience of an year in my Company we encash the leaves with Gross Salary only. Just because our basic salary is only 60 % from gross we did this method. But Actually the cashment is purely an organisation own thing. It depending on company policy.
Please clarify what is maximum days of Earn leave that can be encased at time of ful and final.
If I have 500 earn leave balance, can total 800 days be paid at fnf?
Could not understand how you can claim / pay for 800 days when balance is 500 days. Accumulation of leave shall be as per your leave policy or else as per Factories Act it is 30 days.
That is the reason why many companies are having leave policy allowing more accumulation to encourage regularity of employees.
Every organization has different leave policy. Credited 1 leave after every 21 working is mandatory as per the statutory compliance.
Some companies i have seen that they 21 or 14 EL/PL. Encashing them on basic or gross is the company prerogative.
Accumulating EL and getting them en cashed again depends on Company policy. Some company leave policy states that 45 /47 only be encashed during the FNF.
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