Leave Encashment and Increment Arrears: How Should They Be Calculated?

Hi! Is there any policy regarding leave encashment in case of an increment? Can somebody please tell me if, in the case of leave encashment, we need to calculate the (EL/PL) amount based on arrears of increments or not?

Waiting for your positive response.

Thanks & Regards,
Vartika

Hi,

Please refer to the definition of leave with wages, which is nothing but EL/PL. On any particular day, whatever salary is payable to the employee, the same applies to his accumulated leave as well.

For example, let us assume that the employee has a 30-day leave balance between 1/1/2010 and 30/6/2010, and his salary for the purpose of leave encashment is 10,000/- per month. If his salary is revised retrospectively from 1/4/2010 to 11,000/- per month, then the same becomes applicable for leave encashment as well from 1/4/2010. This does not require a separate policy as this becomes a specific requirement.

Kind regards,
Dayanand L Guddin