Can you clarify for me about leave encashment? Is an employee entitled to receive payment for all remaining earned leave when an employer terminates the employee from the company?
An employee worked for three (3) years. He is entitled to 3 days per month of Earned Leave (EL). He did not take any leave for the last three years. Now he is leaving the company. Is he entitled to leave encashment of 36 * 3 = 108 days of EL? If so, is it taxable as per the rules of the Income Tax Act?
Yes, an employee is "entitled" to receive payment for their unused leave through Leave Encashment. However, some companies have strict policies regarding Leave Encashment. For instance, if an employee leaves during the probation period, they may not be eligible for Leave Encashment. Additionally, if an employee absconds, they will not be entitled to any Leave Encashment.
When we deduct leave based on absence, it is deducted from the gross salary. So, why is it encashed on the basic salary?
Please answer.
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