Understanding EL Encashment: How Is It Handled During Probation and What CTC Components Matter?

Hi group, What is the general practice for EL encashment? What CTC components are taken into consideration for the same? And what is the general practice for the same in case a person leaves during the probation period?

Best Regards, Upasna Kaushik

Hi Upasna, The procedure for EL encashment is a simple formula based on the basic salary of the employee. Encashment = Basic Salary/30 * number of EL. This is applicable to all confirmed employees in the organization who have an EL entitlement. In most organizations, an employee gets EL only after confirmation.

Secondly, it is based only on Basic Salary; no other components of CTC are counted in this. In case a person leaves during probation, he/she would get no leave encashment as there are no ELs.

Cheers! Pooja

Hi! If an employee does not serve the notice period, are the deductions made on the basic/gross salary? Please help!

Hi Rads, Welcome to our citehr.com, and I hope that it proves to be useful to you. Regarding the deduction of an employee not serving the notice period:

1. Deduction is made on basic or gross, depending on the policies laid down in the manual. In case of restructuring, what base do you follow—basic or gross—or what base is followed in the encashment of EL? It's important to have fair and equitable treatment for employees; otherwise, it can lead to messy legal hassles!

2. Good HR practices require that it should be uniform and have an overriding clause that it can be waived off subject to the approval of the MD. The reason being that there could be certain circumstances where an employee cannot serve the notice period, and if management feels that he/she has served the organization well in the past, this could be a good gesture on the part of the company. Also, keep in mind the labor conditions of your industry and the availability of manpower.

Cheerio, Rajat Joshi