Hi Anuradha, Every company follows his rule for leave encashment. But at general it was like that. Encashment will be done in two cases:- i) at the time of separation or retirement from the company; ii) Earned leaved more than their specified limit. In our company we follows the following method:- 1) During service:- Monthly Salary(Basic+D.A.)/30 days* Leave Balances Note:- Excess of 30 days will be considered as leave balance, which eligible for encashment. Illustration:- Basic Salary Rs.10,000 + D.A. Rs. 5,000 i.e. Rs. 15,000/-(Deduct the P.F. amount if any) Denominator will be 30 days and leave over the 30 is suppose 5 days will be taken for leave balance figure: =>15000/30*5 =>2,500/- Note:- The denominator will be generally taken 26 days in case of 6 working days a week and 22 days in case of 5 working days a week. Which is generally not in the process of Indian companies. My personal mail id is [Login to view], for any further query. Kind Regards Mannu Negi