Dear Seniors,
LWP Calculation Basis
Can anyone tell me if the LWP calculation is to be done on gross salary or on (Basic + DA) as per the Companies Act? The leave encashment is to be done on gross or on (Basic + DA).
In the company where I work, currently, the LWP is calculated on the gross salary. A matter is coming up that 'if the leave encashment is done on the (Basic + DA), then the LWP calculation should also be done on the same basis.'
Please advise me on this matter.
Regards
From India, Bhubaneswar
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LWP Calculation Basis
Can anyone tell me if the LWP calculation is to be done on gross salary or on (Basic + DA) as per the Companies Act? The leave encashment is to be done on gross or on (Basic + DA).
In the company where I work, currently, the LWP is calculated on the gross salary. A matter is coming up that 'if the leave encashment is done on the (Basic + DA), then the LWP calculation should also be done on the same basis.'
Please advise me on this matter.
Regards
From India, Bhubaneswar
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Dear Piyali, The salary for the unpaid days is deducted from the gross salary & the salary in lieu of leaves is paid on Basic + DA only as per the govt. organizations.
From India, Chandigarh
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21From India, Chandigarh
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In case of LWP, we need to deduct one day's salary from the Gross Salary (Clear and Simple).
Case - I (Leave Encashment):
But we consider Leave Encashment on Basic + DA because the Notice Period will be considered on Basic + DA only.
Case - II (Leave Encashment):
If at the time of leaving, the notice period will be considered on Gross Salary, then Leave Encashment must be considered on Gross Salary.
Chill HR
[Facebook Page: HRGang](https://www.facebook.com/HRGang)
From India, Gurgaon
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Case - I (Leave Encashment):
But we consider Leave Encashment on Basic + DA because the Notice Period will be considered on Basic + DA only.
Case - II (Leave Encashment):
If at the time of leaving, the notice period will be considered on Gross Salary, then Leave Encashment must be considered on Gross Salary.
Chill HR
[Facebook Page: HRGang](https://www.facebook.com/HRGang)
From India, Gurgaon
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Leave Encashment Under the Factories Act
If the encashment of leave is as per Section 79 of the Factories Act, then the worker shall be paid wages at his full average wages under Section 80. Logically, the rate of wages in such cases shall be the same at which he is paid for the days he avails leave. In other cases of leave encashment, the company can have a different formula, i.e., encashment while in service.
Regards,
Varghese Mathew
Baseindia Consultants
Trivandrum 14.
[Phone Number Removed For Privacy Reasons]
From India, Thiruvananthapuram
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If the encashment of leave is as per Section 79 of the Factories Act, then the worker shall be paid wages at his full average wages under Section 80. Logically, the rate of wages in such cases shall be the same at which he is paid for the days he avails leave. In other cases of leave encashment, the company can have a different formula, i.e., encashment while in service.
Regards,
Varghese Mathew
Baseindia Consultants
Trivandrum 14.
[Phone Number Removed For Privacy Reasons]
From India, Thiruvananthapuram
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Dear Piyali , This is regards your query ,we have to Calculate the LWP on gross salary only not on Basic+D.A. Regards Raju
From India, New Delhi
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From India, New Delhi
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LWP Calculation on Gross Salary
LWP is calculated on Gross Salary and not on BASIC + DA. If an organization considers BASIC + DA as the only components, employees will continue to draw other allowances/components of the salary. In such situations, employees will go for LWP regularly, and absenteeism will hamper regular working. No organization will encourage such practices. Hence, the entire Gross Salary has to be taken for the calculation of LWP.
Regards,
Moorti
From India, Delhi
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LWP is calculated on Gross Salary and not on BASIC + DA. If an organization considers BASIC + DA as the only components, employees will continue to draw other allowances/components of the salary. In such situations, employees will go for LWP regularly, and absenteeism will hamper regular working. No organization will encourage such practices. Hence, the entire Gross Salary has to be taken for the calculation of LWP.
Regards,
Moorti
From India, Delhi
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LEAVE ENCASHMENT NOT INCLUDED IN WAGES FOR P. F. CALCULATION.pdf
Leave Encashment & Salary Calculation.xls x