Leave encashment calculation at the time of notice period not served.

Dear All,

I have a small request. My employee has 40 ELs. He resigned and left without serving a one-month notice period. When I started to prepare F&F, my boss told me not to deduct the notice period amount as he had 40 ELs. He suggested adjusting 30 days as the notice period and calculating 10 days of leave encashment. Can anyone advise me on how to proceed with calculating F&F?

Thank you.

Dear Manyamramesh,

Normally, a Full and Final (F&F) Settlement in the wake of an employee's resignation would include the following heads of payments:

1. Gratuity under the Payment of Gratuity Act, 1972, if the Act is applicable to the establishment and the employee is eligible.
2. Cash value of the number of days of Earned Leave (E.L.) at the credit of the employee's leave account.
3. If the resignation occurs in the middle of the accounting year and the Payment of Bonus Act, 1965 is applicable to the establishment and covers the employee, proportionate bonus for the service rendered may be applicable. However, it should be noted in the F&F document that bonus would be paid after the close of the assessment year.

The directive from your boss to adjust 30 days of E.L. against the unserved notice period and to pay the surrender value for the remainder is accurate. It would be beneficial to mention the same in the F&F documentation.

I hope this helps clarify the necessary actions regarding the F&F Settlement process.

Warm regards,
[Your Name]

Dear Sir,

Could you please share with us any notifications regarding leave calculation?

Thank you.