Calculating End of Service Benefits: How Do I Compensate for Leave Balance?

Hi all, I need to calculate the End of Service Benefit for a leaver at my firm. He has a balance of 23 working days, and let's say his salary is $10,000 to make it easy. Any ideas on how to calculate the compensation for his leave balance?

Thank you,
Regards

Understanding the Term "Leaver"

What do you mean by a leaver? Do you mean to say he is resigning or being terminated? If so, he should be given his full and final settlement, which includes the following:

1. His monthly salary (depending on the days he worked. Since you mention he has leave credits, ideally it would be a full month unless he worked for a partial duration).
2. Balanced leave to be encashed (depending on the company policy and laws of your country).
3. If he is liable to pay anything to the company, the same is deducted from his pay.

We usually have a leave encashment practice on the basic salary and DA of the employees. Many also encash it on the gross salary. As I said, it would depend on the governance laws applicable in your country and the guidance and policies provided by your company.

Thank you for the reply. I meant to say that he has resigned. My actual question is how much money exactly the 23 working days would amount to if his salary is $10,000. I am unsure if you are familiar with the distinction between working days and calendar days in our leave policy. We recently transitioned from a calendar days system to a working days system, which is why I want to ensure that I am calculating the leave days correctly.

Hi Ankita, thank you for the reply. I meant to say that he has resigned. My question, in fact, is how much money exactly the 23 working days would be if his salary is $10,000. I am not sure if you are familiar with the working days versus calendar days leave policy. We have recently switched from calendar days to working days, which is why I want to ensure I am calculating the leave days correctly.

Understanding Leave Calculation

Again, it depends on the laws of your country. In India, there are laws that state there should be one rest day after a maximum of six workdays, so most salaried employees get paid holidays on Sundays. Thus, irrespective of the working days, we pay salary based on calendar days. However, if you follow payment based on working days, that's great.

Details Needed for Pay Computation

Now, I need the following details to compute the pay:
- Monthly gross = $10,000
- Working days of the company = 23
- Days of presence = ???
- Balance leave on his credit = ??? (for leave encashment)

The formula is:
- (Monthly gross / Working days of the company) = per day salary
- Thus, salary for the present days = Per day salary * Present days
- Leave Encashment = Per day salary * No. of balance leaves on his credit

I hope this was helpful.