How Do I Calculate Leave Encashment for an Employee Leaving After 4 Months?

Dear All,

Please provide me with the idea of how to calculate the leave encashment if an employee is leaving the job after 4 months. The salary structure is as follows: Basic 3520, HRA 800, Conv 500, totaling Rs. 4820 per month.

The details for the 4 months are as follows:
1. 26 working days
2. 18 working days
3. 31 working days
4. 07 working days

With Warm Regards,
Vikas Kumar

Leave calculation is done on basic. Some companies calculate on gross salary.

Encashment = (Basic/30) * number of PL.

Neeraj

According to the Factory Act, an employee is entitled to 1 day of leave for every 20 working days. In this case, the total PL becomes around 4.

Encashment formula: (Basic/26) * Number of PL. This will give you the desired result. Since the division by 26 or 30 varies according to different acts, please refer to the Factory Act and Shop & Establishment Act.

Regards,
Neeraj

Dear Vikas,

Does your company have any leave rules? If you need any assistance with that, I can provide you with a copy of the leave rules for your reference.

As per the Factory Act, one is entitled to 1 leave for every 20 working days. Please calculate first how many working days this amounts to: (No. Working Days/20 * Basic + DA).

Thanks & Regards,
Atul.

Hi All,

I don't think that an employee will be eligible for any leave encashment if he is leaving the job in four months. Actually, the Earned Leave/Privilege Leave will be credited to him if he completes 1 year in the present job. Most companies follow this rule, and for factories, he should have worked for 240 days in a year to be eligible for Annual leave with wages. I hope this is clear to all.

Regards,
PRADEEP