Leave Encashment Confusion in Hospitality: Should It Be Based on Gross or Basic+DA?

Dear seniors, I am in the hospitality sector (Under KSCE-1961) and I wanted to clarify the leave encashment confusion regarding whether it is paid on gross or Basic+DA. Under the act, it is defined that wages mean Basic+DA. However, in my last assignment, we were paid based on the Gross salary, whereas my present company suggests paying on Basic+DA. Kindly advise.

Thank you.

Yes, it is correct. The rule states that leave encashment should be given on BASIC+DA, and the calculation should be based on 26 days. However, it also depends on the company's policy. If the company chooses to pay based on Gross, that is their own policy. The company can also choose to pay on Gross salary.

Encashment of leave is only on Basic & D.A as per the Act. If the organization is willing to encash the whole salary, including allowances, then it is fine (up to the policy of the company). Keep in mind the calculation should be based on 26 days.

It is a good practice to pay leave on gross wages because sometimes we adjust EL into employee absenteeism (if the employee wants to adjust his/her Earned Leave from the leave account). Then the adjustment is on gross one day wages against one day leave.

Regards

Please find attached the format for Leave Encashment.

Thank you.

Encashment of Leave is enforced as per the provisions of the Factories Act, in which the term of wages is clearly defined as Basic + DA. However, if the employer desires to pay EL on gross wages, it will definitely be nice and helpful to the employees.

Regards,
PVVB KUMAR

What is the procedure for calculating EL within the Shops & Establishment Act as I am working in the hospitality industry? Kindly advise.

Regards,
Rajiv Madan
[Phone Number Removed For Privacy Reasons]

Please refer to the Leave Encasement rule mentioned in Maharashtra State's Readymade Garment House.

Regards,
Pappu Mishra

I want to know how to claim the privilege leave encashment of a person who has passed away. Please provide further details.

Thank you.