Dear
As per the provisions of the Factories Act, the Encashment of earned leave is provided in Sec. 80. I am reproducing the same for your understanding.
80. Wages during leave period.- (1) For the leave allowed to him under section 78 or section 79, as the case may be], a worker shall be entitled to wages] at a rate equal to the daily average of his total full time earnings for the days on which he actually worked during the month immediately proceeding 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:
Provided that in the case of a worker who has not worked on any day during the calendar month immediately preceding his leave, he shall be paid at a rate equal to the daily average of his total full time earnings for the days on which he actually worked during the last calendar month proceeding his leave, in which he actually worked, 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 workers of foodgrains and other articles.]
(2) The cash equivalent of the advantage accruing through the concessional sale to the worker of foodgrains and other articles shall be computed as often as may be prescribed on the basis of the maximum quantity of foodgrains and other articles admissible to a standard family.
Explanation 1.- `Standard family' means a family consisting of worker, his or her spouse and two children below the age of fourteen years requiring in all three adult consumption units.
Explanation 2.-`Adult consumption unit' means the consumption unit of a male above the age of fourteen years and the consumption unit of a female above the age of fourteen years and that of a child below the age of fourteen years shall be calculated at the rates of 0.8 and 0.6 respectively of one adult, consumption unit.
(3) The State Government may make rules prescribing-
(a) the manner in which the cash equivalent of the advantage accruing through the concessional sale to a worker of foodgrains and other articles shall be computed; and
(b) the registers that shall be maintained in a factory for the purpose of securing compliance with the provisions of this section.
As per my understanding "Total Full Time Earning" means the amount the person earned while he is on duty i.e. it included all allowances as well.
Thus the formula for encashment of unavailed leaves should be : Total Full Time earnings (i.e. Basic Salary + D.A. + other allowances) / 30 * No. of unavailed leaves.
Regards