Some companies who have been giving a EL encashment payment on gross salary?

Every year in January our company has paid leave encashment on Basic Pay. Only 42 EL can accumulate and rest of EL they encash. My question is I heard about some companies who have been giving a EL encashment payment on gross salary. What is the rule actually?

Kindly refer provision under Factories act Annual leave with wages and they suggested us to pay Basic DA HRA not other as wage for paying Lapsed leave salary payment.

Hi Geeta,
A company encashing leaves is always based on Basic+DA which is fulfilling the legal provisions laid down by law. Any company who is encashing leaves on gross salary is doing as a matter of their own policy as they are meeting the minimum requirement of the law. This is done for employee benefit and earn loyalty as well. The factories act states for 30 leaves to be carried forward at max and rest to be encashed. Howver if again the company is forwarding more than that then there is no harm in the same as this is also a kind of benefit been extended as later the employee will get its encashment on the current salary .
Hope I have answered you query.