As per the act, leave encashment is calculated on the basic salary. The leave that can be encashed is Privilege Leave. If staff require money and they want to encash the leave, then we can proceed with the encashment. Additionally, in many companies, leave can accumulate up to 240 days, and if it lapses, it needs to be encashed.
The calculation is based on the latest basic salary. For example, if I want to encash 10 PL and my basic salary is Rs. 10,000, then the amount will be 10 * 10,000 / 30 = Rs. 3333.
Thank you.