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Dear Team Members, Please suggest to me that if an employee makes himself absent without pay for a day in that case we deduct one day's salary. Shall we only deduct the proportionate rate from his basic salary component, or do we need to also deduct the proportionate component like HRA and City Compensatory Allowances? Cause when we cash his leave encashment in the month of December, we make the calculation only on the basic salary component. In that case, we are not considering his other components like HRA and City Compensatory Allowances, though these are under his Gross Salary Components.

Krishnendu Mukherjee

From India, Kolkata
Dear Sir,

If any employee getting loss of pay salary for some days in any month then all components of salary would be deducted on proportionate rate. For eg. if salary component is

Month days 30 Paid days 28
Components Rate Earned
Basic Salary 15000 14000
HRA 6000 5600
Conveyance Allowance 1600 1493
Medical Allowance 1250 1167
Gross Salary 23850 22260

Leave encashment is a different part which is calculated on Basic Salary * Leaves / 30

Dear Seniors correct me if I an wrong.

Neeraj Kumar

From India, Mohali
Ideally its gross / 30 = per day salary (this will include all the fixed salary components being paid monthly)

Please check leave encashment policy of your company everywhere its paid on basic bcos the purpose is to encourage employees to take leave and not having it encashed.

From India, Mumbai

Dear Krishnendu Mukherjee

You need to deduct all components.
If you think logically, if the person was absent all the days of a month, if you were to deduct only basic, then you would be paying him a part of his salary even though he was not in for the whole month. Thus, you deduct based on the gross rate.

As for your leave policy, personally I believe it is wrong, but most companies do that. In effect, Hire-Link says, it encourages employees to use their leave rather than consider it as additional pay. For long term health and wellbeing, taking adequate leave is to be encouraged.

From India, Mumbai
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