Please tell me whether to calculate leave encashment on a CTC basis or basic salary. Actually, in our company, we have calculated it based on CTC. We have done it in the following manner:
Example Calculation
For example, if the CTC is Rs. 15,000/-, the daily salary is Rs. 500. Therefore, 500 * number of leaves (EL) (500 * 11.5 EL = 5750). Thus, we have given encashment of Rs. 5750/- to the employee.
Is this correct? Please guide.
From India, Pune
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2Example Calculation
For example, if the CTC is Rs. 15,000/-, the daily salary is Rs. 500. Therefore, 500 * number of leaves (EL) (500 * 11.5 EL = 5750). Thus, we have given encashment of Rs. 5750/- to the employee.
Is this correct? Please guide.
From India, Pune
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Is Leave Encashment Calculated on CTC?
Please advise on whether leave encashment should be calculated based on CTC or basic salary. Currently, in our company, it is calculated on a CTC basis. Here is an example of how we have been calculating it:
For instance, if the CTC is Rs. 15,000, the daily salary would be Rs. 500. Therefore, for 11.5 earned leaves (EL), the calculation would be 500 * 11.5 = Rs. 5,750. Consequently, we provide an encashment of Rs. 5,750 to the employee.
Is this approach correct? Kindly provide guidance.
From India, Pune
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Please advise on whether leave encashment should be calculated based on CTC or basic salary. Currently, in our company, it is calculated on a CTC basis. Here is an example of how we have been calculating it:
For instance, if the CTC is Rs. 15,000, the daily salary would be Rs. 500. Therefore, for 11.5 earned leaves (EL), the calculation would be 500 * 11.5 = Rs. 5,750. Consequently, we provide an encashment of Rs. 5,750 to the employee.
Is this approach correct? Kindly provide guidance.
From India, Pune
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hi Pallavi, If your fixed monthly gross component is Rs. 15000/- then above calcuation in correct.
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From India, Pune
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So its in-correct. But we can calculate leave encashment of CTC also. ITs not complusion that we need to do it on Basic salary??
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From India, Pune
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CTC is only for employer reference on how much they are spending for an employee. CTC breakup could include the EL part but not for calculation. EL has to be calculated based on the fixed/Gross salary for a worker/workman. For staff, it depends on the company's policy; it could be gross or only basic.
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Normally, the leave enchasement is done on gross monthly salary only. So your calculation is right.
From India, Pune
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From India, Pune
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LEAVE ENCASHMENT NOT INCLUDED IN WAGES FOR P. F. CALCULATION.pdf
Leave Encashment & Salary Calculation.xls x