Is It Fair to Exclude Supplementary Allowance from Leave Encashment? Seeking Your Thoughts

Dear All, I want your opinion on the following query:

There is a company in Pune that pays a supplementary allowance to all the management staff as one of the components of the salary. They deduct the supplementary allowance on:

1. Notice pay
2. Leave without pay

They pay the supplementary allowance for Privilege Leave, Casual Leave, Sick Leave, and for all the paid days. The supplementary allowance is around 30% of the monthly salary.

Leave Encashment and Supplementary Allowance

Now, when the question comes to paying the supplementary allowance for leave encashment at the end of the year or leave encashment after retirement or resignation, they do not include the supplementary allowance.

My question to all of you is:

Is this right? If yes, why? If no, then what should the employees do because it is quite a big amount as the leave encashment amounts to more than 140 days.

Thanks,
Clement

"Leave encashment is calculated in Basic Salary" - Do you have any provisions (I need proof)? Which act can I refer to? Whether Leave encashment is calculated based on 30 days or 26 days? I need to know the specific provisions.

Regards,
Brother

Dear friends,

Leave Encashment Norms

Never leave encashment norms are mentioned in the appointment letter. It is a policy matter. Most companies encash leave based on gross salary. It was after the introduction of the supplementary allowance in 2007 that the company stopped including supplementary allowance for leave encashment.

Regards,
Clement

It actually depends on company policy matters. It shall be decided on the basis of your policy. So, it is the discretion of management to calculate the payment either as CTC or basic pay, as agreed by the management committee.