Why Is Basic Salary Divided by 26 in Earned Leave Calculations? Seeking Clarity!

Hi friends, I am having a query about the calculation of ELs. Actually, the formula for calculating ELs is Basic Salary/26 * No. of leaves. In that formula, why should we divide the Basic salary by 26 specifically? I thought that 26 represents the working days in a month. However, I would like a clear explanation on this. Can anyone help me in this regard?

Thank you.

There is no specific formula for calculating ELs. This calculation depends on the Leave Policy of the concerned organization. The leave policy varies from organization to organization. Some organizations calculate (Gross Salary - Incentives) / 30 * No. of ELs, Gross Salary / 30 * No. of ELs, and Gross Salary / 26 * No. of ELs, etc. Most organizations divide the Gross Salary by 30 days only.

The concept of 26 days is commonly seen in IT sectors. It seems they are following the Gratuity calculation formula, i.e., Basic Salary (PF Salary) / 26 * 15 * No. of completed years of service. I believe this information addresses your query.

Regards, Ramesh Rao H.R-SPML

Hi,

Regarding the calculation of ELs, is it 15 days per 1 EL or 20 days per 1 EL? Could you please clarify this for me?

Thank you.