How Should Salary Be Calculated When Using Earned Leave to Cover Notice Shortfall?

Case Details:
Month starts at: 01/01/2017
Resign date: 04/01/2017
Last day served: 21/01/17
Earned leave in hand: 33
Notice Period as per appointment letter: 30 days
Notice period served: 18 days
Shortfall to serve notice period (30 days): 12 days
Employee compensates shortfall in notice period with 12 earned leave
Leave encashed by employer: 21 days
Salary Paid: 21 days on a pro-rata basis

Question:
What would be the employee's salary: will he receive only 21 days' full salary, or is he eligible for 30 days' full salary plus 3 days for that month?

Please note, the earned leave (EL) carried forward is restricted to 30 days under the prevailing labor laws unless provisioned at higher numbers in Certified Standing Orders.

Secondly, while making encashment of earned leave, the gross wage is not considered. The gross wage is taken into account when someone avails the EL. In your case, after deduction of the notice period if provided in the appointment letter, you are liable to pay for the balance EL.

P.K. Sharma

1-month notice period means 4th January 2017 till 3rd February 2017. The last day of working is the 21st of January 2017. Therefore, the shortfall of the notice period is from the 22nd of January to the 3rd of February, which is 13 days. The balance leave is 33 days. Subtracting the shortfall of the notice period (13 days), the encashable leave is 20 days.

The concerned employee is eligible for 21 days of full salary for January 2017, with all statutory deductions applicable, and 20 days of leave encashment as per your company policy.

Tnx & Regds, Suresh

This is subject to the HR policy of the company. There is no law related to this subject matter.

V. Murali