Leave Without Pay: Should It Be Calculated on Basic or Gross Salary? Seeking Your Advice

Dear Seniors,

Greetings!

The calculation of Leave Without Pay, if done on the Basic or Gross salary, is a matter of consideration. Your expert opinion on this would be greatly appreciated.

Thanks and Regards,
Hema

For calculation of Loss of Day, all components should be taken, which means gross salary. For Loss of Hrs, only Basic, DA, and Special Allowance should be taken.

Hi,

1. If an employee is taking leave without pay: The amount deducted will be the same as the amount paid while leave is taken with pay. It is the Gross Pay that companies consider.

2. If an employee goes for encashment of leave: This is followed as per the letter of appointment/rules of the company. Generally, companies consider Basic pay in the case of encashment of leave, which is unfair but is a fact.

Trust the above information is useful.

Regards,
Niraj

Dear All,

Are there any provisions that may prohibit companies from encashing leaves based on Gross Salary instead of Basic Salary?

Ensure that there is a single line break between paragraphs to improve readability and maintain clarity in the content.

Hi Hema,

I will explain with an example. The gross (BASIC+ HRA+ CONV+ Spcl Allow+.....) = 20000 p.m. Per day, it is 666.66/-. If the employee has worked for 29 days, then I will pay him 666.66*29 = 19333.33/-. Hence, it's based on gross and not on basic, because when taken on gross, your basic and PF are attracted automatically. PT will not be affected. I hope I have tried to make it simple and clear.

Regards,
Gaurav Vedak
9821880012

If an employee has been on Leave Without Pay, then the total number of days taken into consideration for computing his salary for the month will be less than the number of days of LWP.

Example:

Total days in the month: 31 days

Weekly Off Days: 5 days

Holidays: 1 day

Days Present: 20 days

LWP: 5 days

Salary for him will be made for only 26 days.

Best Wishes,

Vasant Nair

Hi Hema,

LWP or LOP is usually calculated based on the gross salary. Some organizations, such as ours, consider it a welfare measure and provide a benefit where for LOP within 5 days, only the Basic and DA are deducted while other components such as HRA, conveyance, etc., are not deducted.

Good Luck!!!
:::Dhinakaran

Calculation of leave without pay will be based on the gross salary, for example:

Gross Salary: 8000/-
Days in a month: 30
Working Days in a month: 26

Therefore, Gross Salary would be: 8000/30*26 = 6933.33 or 6934/-

Now, the salary break-up will be calculated based on a gross salary of 6934/- for the respective month.

Regards,
Moninder
M: 9717388549

Regarding LWP (Leave Without Pay), it is considered as being absent from duty, and in such cases, a deduction is made from the gross salary, except for HRA. This is because an employee is required to pay house rent for the full month, whether they are on leave with pay or without pay.

Regards,
CS SHUKLA

Let's assume that the total number of days for which the salary is to be prepared is 30 days. An employee has been on Leave Without Pay (LWP) for 12 days. His salary will be prepared for only 28 days.

LWP will be calculated on the same basis as the days for which the employee will be paid salary for the month. Yes, it is the Gross Wages/Salary on which LWP will be calculated.

Vasant Nair

I would like to know about the calculation of LWP. As I had a discussion with a labor consultant and came to know that it should be deducted only from the basic salary, but right now I am calculating it based on the gross salary. Kindly clarify the issue.

Regards,
Gautam

Dear Associates,

Urgent Queries on Leave Without Pay and Salary Deductions

Please respond to the following urgent queries:

1. If one's leave without pay from June 20, 2012, continues until July 02, 2012, will the salary deduction for July 01 (Sunday) be made or not? Kindly confirm if, during the mentioned leave without pay period, the salary deductions will be for 11 days (excluding 2 Sundays) or 13 days (including 2 Sundays). Please provide a reference to the relevant rule, if any.

2. Common Rules for Salary Deductions in India

What are the common rules for salary deductions for leave without pay across the industry in India, especially in the Transport or Logistics sector in Mumbai/Maharashtra?

3. Inclusion of Sundays and Holidays in Salary Deductions

Does the salary deduction for leave without pay include Sundays and holidays that are before, after, or within the leave without pay period? In other words, will the deduction be based only on the days of work missed or also include Sundays and other holidays?

4. Calculation Basis for Per-day Salary Deductions

When making such deductions, is the per-day salary calculated based on 31 or 30 days?

I am eagerly awaiting your valuable responses.

Thank you.

Regards