Ajinkya More
Hi All, Please help me to understand about leave encashment rule (e.g - 5% on (Basic+DA) ) in payroll. Regards, Ajinkya More.
From India, Mumbai
nanu1953
334

Leave encashment policy is vary from organizations to organizations. Usual practice to allow encashment to a certain limit and in some cases beyond the accumulation limit.

The value of encashment usually number of days encashment x per day gross salary.

S K Bandyopadhyay ( WB, Howrah )
CEO-USD HR Solutions

From India, New Delhi
Ajinkya More
Yes I agree with you Mr.Bandhyopadhyay sir that leave encashment is vary organization to organization. But I want to know, is there any rule mentioned in any act about leave encashment as part of gross salary, which calculated 5% on (Basic+DA). Particularly sometime its related to contractual employees salary.


Regards,
Ajinkya More.

From India, Mumbai
Madhu.T.K
4208

As per law you cannot surrender leave while you are in service but can be done at the time of leaving the company. But many companies permit accumulation of leave beyond the limit as permitted under the law, and also permit surrender of certain number of leaves during service. In such scenarios, the management may fix the surrender value of leaves, and in practice it will be 100% of Basic pay and DA.

Leave encashment at the time of termination of employment should be based on that salary which is paid to an employee when he avails a leave. Normally, an employee on leave will not be paid only 5% or such other percentage of Basic and DA, but he is paid gross salary which shall include besides basic and DA, the allowances like HRA, special allowances etc. Then 100% of that salary should be paid when you surrender unavailed leaves.

From India, Kannur
suresh2511
246

Dear Ajinkya,

The majority of construction sites and project sites pay their employees 1.5 days of paid leave each month, which is 5% of their gross wage, in accordance with standard procedures. (which is not addressed in any statute at all).
Every worker is entitled to one day leave for every twenty days of working under the terms of the Factories Act. As a result, he or she is qualified for maximum up to 15 days of earned leave on a calendar year, with a monthly average of 1.25 days. But instead of paying 1.25 days, firms are paying 1.5 days leave every month.

Regards,

Suresh

From India, Thane
rammi24
36

Dear Ajinkya,

The leave policy is designed by any organization keeping in mind considering Labour Laws under Factories Act, Shops and Establishment Act in India. As per factories act / Shops establishment act Earned / Privilege leave is for every 20 days one leave and it has to be enchased if untilzed on basic and VDA or DA components. However, company can do better and best up on above the features specified by Labour Laws, please refer Factories act / Shops establishment act state rules applicable to your Organization.

From India, Telangana
Ajinkya More
Thanks all for your valuable inputes. I think, I got my answer in Mr. Suresh sir’s comment.
From India, Mumbai
Madhu.T.K
4208

Good, but your question was not on how leave is earned by an employee but how is it encashed.
From India, Kannur
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