Why Is Leave Salary Based on Basic Pay but LWP Deductions on Gross? Seeking Insights

Leave Salary and LWP Deductions

In my company, leave salary is provided or encashed based on the basic salary, while Leave Without Pay (LWP) deductions are made on the gross salary. Employees are questioning why the company provides leave salary based on the basic salary but deducts LWP from the gross salary. They argue that if the company is providing leave salary based on the basic salary, then LWP should be deducted from the basic salary instead of the gross salary.

Kindly provide your comments on this matter in accordance with the rules.

Regards,
Dhruvin

Leave Without Pay (LWP) and Salary Calculation

LWP is based on gross salary. Leave salary is a benefit given to employees and cannot be compared with salary calculation. Suppose an employee is on LWP for the entire month; is he eligible to receive the salary excluding the basic? The answer is clearly NO.

Regards,
Pon