Leave Encashment and PF Deductions: What Are the Rules for Ongoing Employees?

Can anyone please let me know regarding the rule in PF in case of any employee drawing leave encashment in continuance of his/her service, whether PF on the leave encashment amount is to be deducted or not.

PF need not be deducted from the leave encashment amount paid to employees.

Regards,

Madhu.T.K

Dear Mr. [Last Name],

As per Mr. Madhu, you need not deduct PF on PL encashment days as per the Supreme Court Judgment dated 12.3.2008. The amount received by encashing the Earned leave is not part of the "Basic Wage."

Best Regards,

V. Srinivasarao
Manager - P&A

Dear Ashim,

Please find the attachment for clarifications. This will eliminate all doubt.

Best Regards,
S K Sinha

Leave encashment is an extra benefit provided to employees and does not form a part of the wage/salary. As such, PF is not deducted from leave encashment.

TR Chhabria