El encashment reference on provision/rules under factories act?

Dear Friends,
Greetings To you all,
I would need some clarity on below formula.
If Leave Encashment is done on as below.
BASIC + DA / Present Month ( 30 / 31 ) * No of EL = Payable
I.e If
Basic - 5000
DA - 2000
Month Days - 30
Balance EL - 20
Then
5000+2000/30*20 = 4666.66 ( Round Off - 4667 ) is payable.
Is this is correct pls comment for any correction with valid reference on provision or rules mentioned in any books.
Thanks
Warm Regards,
Chandra Dev
Head HR

Legally there is no such term as Leave Encashment, it is payment of leave wages. This happens at end of employee service. But some companies pay-off leave wages annually. In leave wages all allowances are to be covered besides basic & DA.

If you are in Factory refer sec 79 of Factories Act. If you are in commercial establishments refer your states Commercial establishments Act.

Dear Mr. Chandra Dev,
Formula for EL payment is Last Basic salary+DA/26*No. of EL.
i.e.
Basic - 5000
DA - 2000
EL - 20
Then payment would be
7000/26*20= 5385
Regards,
Rahul Sindhwani