Understanding Leave Encashment in India: Is It Universal and How Do You Calculate It?

I am from a real estate company and would like to know about the Leave Encashment rule in India. Is it applicable to all industries, and how do I calculate the same?

Thank you.

Leave encashment is paid annually for the number of earned leaves (the total number of earned leaves to be given is decided by the management) left in the employee's account. It is also considered taxable income.

Types of Leave Encashment Calculation

Normally, leave encashment is done by two methods:

- (a) Mostly - Basic + DA/26 * number of days leave to be encashed
- (b) Very less - Gross salary/30 * number of days leave to be encashed (ALMOST PER DAY SALARY/30 * UNUSED LEAVES)

Regards

Dear Trupti, there are 3 types of leaves: 1. EL/PL 2. SL 3. CL.

Leave Entitlement According to Indian Law

According to Indian law, an employee earns 1 EL for every 20 days worked in the plant. However, most companies provide more EL than the minimum required by law, as the law always addresses the minimum requirement. Employees have the right to claim reimbursement for all unused EL, as explained by Mr. Manoj Devda.

Regards,
Nishant

Leave encashment will be applied in cases where the employer is not willing to grant leave due to workload. If an employee does not take any leave despite leave being available in the proper number, it should be forfeited. Leave encashment is not a legal right of the employee, but taking leave is their right. Establish a company policy that any unused leaves exceeding 60 will be forfeited so that employees take their leave timely.

Regards,
Madhusudan Mishra

Kindly provide answers to the following queries:

- What amendments have occurred in EL/PL?
- When will it be credited to employees' accounts?
- Is there a policy for leave encashment as per the law?

Please send your replies at the earliest.

Thanks & Regards,
Jagan