LWP Calculation Confusion: Should It Be Based on Gross Salary or Basic + DA?

Dear Seniors,

LWP Calculation Basis

Can anyone tell me if the LWP calculation is to be done on gross salary or on (Basic + DA) as per the Companies Act? The leave encashment is to be done on gross or on (Basic + DA).

In the company where I work, currently, the LWP is calculated on the gross salary. A matter is coming up that 'if the leave encashment is done on the (Basic + DA), then the LWP calculation should also be done on the same basis.'

Please advise me on this matter.

Regards

The salary for the unpaid days is deducted from the gross salary, and the salary in lieu of leaves is paid on Basic + DA only, as per the government organizations.

In case of LWP, we need to deduct one day's salary from the Gross Salary (Clear and Simple).

Case - I (Leave Encashment):
But we consider Leave Encashment on Basic + DA because the Notice Period will be considered on Basic + DA only.

Case - II (Leave Encashment):
If at the time of leaving, the notice period will be considered on Gross Salary, then Leave Encashment must be considered on Gross Salary.

Chill HR
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Leave Encashment Under the Factories Act

If the encashment of leave is as per Section 79 of the Factories Act, then the worker shall be paid wages at his full average wages under Section 80. Logically, the rate of wages in such cases shall be the same at which he is paid for the days he avails leave. In other cases of leave encashment, the company can have a different formula, i.e., encashment while in service.

Regards,
Varghese Mathew
Baseindia Consultants
Trivandrum 14.
[Phone Number Removed For Privacy Reasons]

Dear Piyali, this is regarding your query. We have to calculate the LWP on gross salary only, not on Basic + D.A.

Regards, Raju

LWP Calculation on Gross Salary

LWP is calculated on Gross Salary and not on BASIC + DA. If an organization considers BASIC + DA as the only components, employees will continue to draw other allowances/components of the salary. In such situations, employees will go for LWP regularly, and absenteeism will hamper regular working. No organization will encourage such practices. Hence, the entire Gross Salary has to be taken for the calculation of LWP.

Regards,
Moorti

Leave Without Pay (LWP) and Leave Encashment Calculation

Can anyone tell me if the LWP calculation is to be done on gross salary or on (Basic + DA) as per the Companies Act? Is the leave encashment to be done on gross or on (Basic + DA)?

In the company where I work, currently, the LWP is calculated on the gross salary. A matter is coming up that if the leave encashment is done on the (Basic + DA), then the LWP calculation should also be done on the same basis. Please advise me on this matter.

Regards,
Mshegde