Understanding Leave Encashment in F&F: Should It Be Based on Basic or Gross Salary?

Dear Seniors, I need clarity on the encashment of Paid Leaves in F&F. Do we need to calculate based on the basic or on gross salary? Suppose the gross salary of an employee is 25,000, and he has 20 paid leaves upon exit. In F&F, do we need to pay him 16,667 ((25,000/30)*20) or 6,667 ((45%*25,000)/30)*20)? Please suggest.

Thanks,
Raam

Depends on company policy, but it is basically calculated based on the basic salary. The formula for earned leave encashment is: Basic Salary / 26 * Number of Earned Leave Balance. However, you can use Gross Salary instead of Basic if your company policy allows that.

Leave encashment is generally calculated based on the gross salary of any employee. The formula for calculating leave encashment is Gross Salary * Number of earned leaves / 30. I recommend checking with your management regarding the leave encashment policy.

Thank you.