Dear Experts,
Please tell me, what will be the basis of calculation in payment of Notice Pay & Leave Encashment?
Will it be calculated on monthly basic + DA only or on the total monthly salary including all allowances?
Please guide.
Thanks,
P. Bagchi
From India, Calcutta
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Please tell me, what will be the basis of calculation in payment of Notice Pay & Leave Encashment?
Will it be calculated on monthly basic + DA only or on the total monthly salary including all allowances?
Please guide.
Thanks,
P. Bagchi
From India, Calcutta
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Hi, Notice pay is calculated based on the Gross salary of the employee. As for as Leave encashment is concerned it calculated based on Basic+DA.
From India, Madras
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1015From India, Madras
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Understanding Salary Components and Allowances
The salary, as per private company offer letters (other than companies that follow specific rules regarding pay fixation), often includes allowances that are considered for deduction proportional to the days not worked, i.e., Loss of Pay leave days. In such cases, these allowances are essentially camouflage allowances and are part of the basic wages. For example, paying HRA as part of the salary to all employees without reference to their residential status, paying a special allowance to all employees without reference to any special skill, and paying conveyance allowance equally to all employees irrespective of the distance covered to reach the office are allowances typically used by private organizations to reduce the employer's burden of various contributions, including gratuity and leave encashments.
Traditional Salary Structure
The old concept was that there would be a basic salary that would increase year on year depending on the annual increment fixed or the employee's performance, along with an allowance called dearness allowance, which is paid to compensate for the cost of living increase. In addition to these two, certain employees would receive a special allowance considering the special skill required to achieve results. Some employees who need to lease a house would be paid HRA, and some are paid an education allowance. These are allowances paid over and above the salary.
In such cases, wages shall mean that only the basic and DA qualify for all statutory payments. However, when you have a whole figure as a salary and then bifurcate it into small components, the salary should mean the whole amount only.
From India, Kannur
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The salary, as per private company offer letters (other than companies that follow specific rules regarding pay fixation), often includes allowances that are considered for deduction proportional to the days not worked, i.e., Loss of Pay leave days. In such cases, these allowances are essentially camouflage allowances and are part of the basic wages. For example, paying HRA as part of the salary to all employees without reference to their residential status, paying a special allowance to all employees without reference to any special skill, and paying conveyance allowance equally to all employees irrespective of the distance covered to reach the office are allowances typically used by private organizations to reduce the employer's burden of various contributions, including gratuity and leave encashments.
Traditional Salary Structure
The old concept was that there would be a basic salary that would increase year on year depending on the annual increment fixed or the employee's performance, along with an allowance called dearness allowance, which is paid to compensate for the cost of living increase. In addition to these two, certain employees would receive a special allowance considering the special skill required to achieve results. Some employees who need to lease a house would be paid HRA, and some are paid an education allowance. These are allowances paid over and above the salary.
In such cases, wages shall mean that only the basic and DA qualify for all statutory payments. However, when you have a whole figure as a salary and then bifurcate it into small components, the salary should mean the whole amount only.
From India, Kannur
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Leave Encashment & Salary Calculation.xls x
LEAVE ENCASHMENT NOT INCLUDED IN WAGES FOR P. F. CALCULATION.pdf