Understanding Leave Encashment Calculation Formula in Employee Compensation

Dear Seniors,

Kindly let me know what the formula is for calculating Leave Encashment. I will be thankful if you reply to me soon.

Thanks and Regards,
Paras Thakur

Dear Paras,

There are two ways of calculation. Some companies pay leave encashment on Basic+DA (Basic Pay), and some pay on gross salary. Please refer to the historical data of your organization to avoid any unnecessary chaos in your organization. It's calculated as follows:

Considering an employee's gross salary is Rs. 20,000, and he has 15 ELs/PLs credited in his leave account. He will be paid Rs. (20,000/26=769.00) (769x15)=Rs. 11535.

Warm regards,
Umesh Chaudhary
(welcomeumesh@yahoo.com)