Understanding Earned Leave: Is It Calculated on Basic or Gross Salary?

Dear all,

Can anybody enhance my knowledge on the parameters for the calculation of earned leave? Is it calculated based on basic salary or gross salary?

Farah

Hi Farah,

Earned leave will be calculated based on the basic salary only. The formula to calculate earned leave is Total Basic Salary divided by the Total Number of Months worked, multiplied by the number of earned leaves divided by thirty days.

For Example:
120000 / 14 * 15 / 30 = 4286

Please let me know if you need any further clarification or information.

Thank you.

Dear,

Update your knowledge. Leave encashment is to be paid on Gross Salary. This is with reference to the decision given by the Supreme Court. It's on GROSS SALARY.

Regards,
Nitin Nikam

Hi,

The formula to calculate earned leave (EL) is the total basic salary divided by the total number of months worked, multiplied by the number of earned leaves divided by thirty days, as given here.

Please clarify if the calculation should be based on thirty days or only 26 days, considering that payable days are only 26 with the other 4 days being holidays. Does it depend on the company's payment system?

Thank you.

Hi,

The formula to calculate Earned Leave is Basic Salary divided by 26, i.e., payable days multiplied by total earned leave. For example, if the Basic Salary is 5000, the calculation would be as follows:

[ frac{5000}{26} times 15 = 2884.6 ]

Please clarify if it is necessary to have the number of months to calculate earned leave. Are the payable days alone not enough to calculate earned leave?

Dear Nitin,

Could you please provide me with the details of the Supreme Court's decisions on Earned Leave?

Regards,
Rahul

Hi,

Can someone clear my doubt on the calculation of PL/EL? As far as I know, it is:

Monthly Basic salary * No. of leaves
30

But as was earlier mentioned:

120000 15
-------- * --- = 4286
14 30

OR

Monthly Basic salary * No. of leaves
26

Which is the correct method to calculate?

Regards,
Deepa

Dear,

Please find below the calculation for Earned Leave (EL) on Basic salary:

(Basic + DA) / 30 * (Number of EL) = Gross Earnings
Gross Earnings - PF = Net Pay

Thank you.

Dear Sir,

This is K. Ravi Kumar from Hyderabad. I have one query related to Earned Leave (EL). I joined my present company on 14th June 2006 and am still continuing my job. From 14th June 2006 to March 2007, my BASIC SALARY was Rs. 3500, and from April onwards, my BASIC SALARY IS 4750.

How should we calculate the EL based on these salary changes?

I kindly request you to provide me with your complete details for any correspondence regarding HR issues.

Thank you.

Yours faithfully,

Kasina Ravi Kumar

E-mail: kasinaravikumar@gmail.com

PH: 09989111149

HYDERABAD.

Hi Gopan,

Mr. Peer Mohammed has provided a link. Please go through that and then let's discuss. We are discussing the calculation of leave encashment amount, not about PL/EL. I have not come across any such Supreme Court judgments that state encashment is based on Gross salary. The situation in Tamar & CO vs. employees way back in 1998, which led to the Supreme Court judgment in that case, was due to a consolidated salary payment from which all deductions were made before calculating the encashment amount. The Supreme Court stated that gross salary should be used for calculation, not the NET salary. Generally, for encashment purposes, Basic + DA is considered, not Gross. Additionally, eligible days are calculated based on 30 days, not 26 days, because leave is earned for the number of days of attendance, including off days, not just worked days.

Please refer to the Factories Act 1948 for clarity.

Regards,
Gopan

Hi Farah,

It would be more convenient if one calculates EL/PL based on last month's basic salary and the number of days of actual PL balance.

Comments are welcomed.

Regards,
Vidushi Jaiswal
Aasma Consulting

<link no longer exists - removed>

Hi Everyone,

I have been following for a longer time regarding the calculation of earned and casual leave. Hope for cooperation from your end. The main problem is that everyone's opinion on the said topic differs, so I need an expert's opinion regarding the above subject. The matter is serious as I am facing a lot of problems.

Regards,
Priyangshu Chakraborty
Bangalore.