PL Encashment - Salary Components

Hi
One of our employee's has questioned me that, whilst encashing PL why do we pay only the basic salary and not all the components of CTC?
We in our organization whilst settling F&F pay PL to employees as per the following formula:
Basic Salary/30* No of days of PL (max of 90 days)
Kindly suggest me a suitable answer

dear
your formulae for calculation needs little rectification
basic should be divded by 26 not by 30 as you have mentioned.
as regards to pay it on basic or CTC it is company policy and no act
says whether it should be paid on basic or gross ,so company policy will prevail.
regards
j s malik

Hi,
Its depends upon what practice company has followed in past such cases. Normally Basic + Dearness Allowances considered for Leave Engashment.
Secondly upper limit for PL accumulation is difference from company to company as per their policies. You can encash the PL upto that limit only and not more than that.
Thanks.
Shantanu:)

HI,
I suppliment Mr.Shantanu & add that PFable salary i.e. Basic + Dearness Allowance (Fixed or Varable) + High Coust are considered for Calculation of amount for Leave Encshment.
With respect to Mr.MalikJS, I understand that the formula for dividing monthly salary by 26 days is only applicable in case of Payment of Gratuity under the Payment of Gratuity Act,1972 --- (Vide..Sec.4-Payment of Gratuity -Sub Section(2)-- explanation inserted by Act.No.22 of 1987 w.e.f.1.10.1987 which reads as --"In the case of a monthly rated employee, the fifteen days' wages shall be calculated by dividing the monthly rate of wages last drawn by him by twenty-six and mutiplying the quotient by fifteen.)
Therefore, your formula by dividing 30 will be O K.
Regards
J N Pathak