Hi all, Need more clarity on if the leave encashment should be done on basic salary of gross salary..:confused:,is there anywhere one can refer this???
From India, Bangalore
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1From India, Bangalore
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dear law is not clear on this whether it should be paid on basic or gross. so you make your own policy in this regard but most of the company pay it on basic. tks j s malik
From India, Delhi
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From India, Delhi
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Thank you so much for your quick response. I needed one more clarification. When an employee goes on leave, we do not deduct from the basic salary. Then why is the leave encashment calculated based on the basic salary?
From India, Bangalore
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From India, Bangalore
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Dear,
I told you the law is not clear on this. You can create your internal policy, and some companies pay leave encashment on the full salary as well. But as you asked for justification: if someone goes on leave, we give them full salary, whereas if they take encashment, we pay them on the basic.
Why should the company pay allowances when HRA is already being paid to the employee? Why is the employee required to pay again in encashment? Employers take advantage of the act as it is not clear.
Thank you.
J.S. Malik
From India, Delhi
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I told you the law is not clear on this. You can create your internal policy, and some companies pay leave encashment on the full salary as well. But as you asked for justification: if someone goes on leave, we give them full salary, whereas if they take encashment, we pay them on the basic.
Why should the company pay allowances when HRA is already being paid to the employee? Why is the employee required to pay again in encashment? Employers take advantage of the act as it is not clear.
Thank you.
J.S. Malik
From India, Delhi
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Hi Dear,
I do agree with Mr. Malik completely as there is no rule and law for leaves; it is internal company policy. Like in my previous company, it used to be calculated on basic, and here in my present company, it is calculated on CTC, so again it depends.
Hope it's clear to you.
Anu
From India, Delhi
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I do agree with Mr. Malik completely as there is no rule and law for leaves; it is internal company policy. Like in my previous company, it used to be calculated on basic, and here in my present company, it is calculated on CTC, so again it depends.
Hope it's clear to you.
Anu
From India, Delhi
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Hi Dear Malik Sir,
I have attached a challan copy preparing Excel sheet. Is it correct or not? Please reply to me. Also, in a year, how many leaves do we calculate? Actually, I have no knowledge of the leave information.
Your,
Jogindra
From India, Mumbai
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I have attached a challan copy preparing Excel sheet. Is it correct or not? Please reply to me. Also, in a year, how many leaves do we calculate? Actually, I have no knowledge of the leave information.
Your,
Jogindra
From India, Mumbai
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We can have better clarity if we refer to the Bombay Shops and Establishment Act, 1948, specifically in Chapter VII regarding Leave with Pay and Payment of Wages - Section 35(2) on Leave and Section 36 on Pay during leave.
Thanks & Regards,
Asitosh Sharrma
From India, Pune
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Thanks & Regards,
Asitosh Sharrma
From India, Pune
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Hi all, isn’t there a recent Supreme court ruling that the Leave encashed on resignation is to be paid in full and not on basic salary?? Any one has idea on this???
From India, Mumbai
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From India, Mumbai
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Dear All, In our establishment, We are following Leave Calculations based on Basic Salary. The Calculation is derived as on below, = Basic/30*No. of Days. Thanks Jana
From India, Jhajjar
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From India, Jhajjar
Acknowledge(0)Amend(0)CiteHR is an AI-augmented HR knowledge and collaboration platform, enabling HR professionals to solve real-world challenges, validate decisions, and stay ahead through collective intelligence and machine-enhanced guidance. Join Our Platform.
Leave Encashment & Salary Calculation.xls x
LEAVE ENCASHMENT NOT INCLUDED IN WAGES FOR P. F. CALCULATION.pdf