Good Afternoon All, I have one query from our staff. If leave encashment is paid based on the basic salary, then should LWP be deducted from the full salary? I kindly request that anyone who can, please share the clause for leave encashment and LWP.
From India, Mumbai
Acknowledge(0)
Amend(0)
From India, Mumbai
Acknowledge(0)Amend(0)
Hi, both are different.
If the employee is absent without leave, then for that particular day, they are not eligible for any salary, including all allowances. You cannot implement LWP in the basic salary alone.
Leave encashment is statutory and different.
From India, Madras
Acknowledge(0)Amend(0)
1015If the employee is absent without leave, then for that particular day, they are not eligible for any salary, including all allowances. You cannot implement LWP in the basic salary alone.
Leave encashment is statutory and different.
From India, Madras
Acknowledge(0)Amend(0)
If leave without pay deduction is on gross salary, then the leave encashment should also be on gross salary. The policy of considering only the basic salary or the basic and dearness allowance (normally) while treating the entire salary for deductions is flawed in law.
From India, Kannur
Acknowledge(0)Amend(0)
From India, Kannur
Acknowledge(0)Amend(0)
Leave encashment and notice pay
Leave encashment and notice pay can be comparable, but not leave without pay (LWP). If an organization is paying leave encashment based on the basic salary, then they cannot ethically ask for gross salary in lieu of a short notice period. LWP is a leave without pay, so there is no question of someone being paid the allowance for the period he/she is absent.
From India, Kolkata
Acknowledge(0)Amend(0)
Leave encashment and notice pay can be comparable, but not leave without pay (LWP). If an organization is paying leave encashment based on the basic salary, then they cannot ethically ask for gross salary in lieu of a short notice period. LWP is a leave without pay, so there is no question of someone being paid the allowance for the period he/she is absent.
From India, Kolkata
Acknowledge(0)Amend(0)
Very true, and that is why it is an allowance. In private organizations, HRA is part of the salary and is given to all employees because it is excluded from the scope of wages/salary for the calculation of payments like Bonus, PF, Gratuity, and leave encashment. It is also subject to deduction when an employee takes a single day's leave without pay. It is interesting that it is paid to all employees without reference to their residential status.
If it is to be treated as an allowance not part of wages/salary, it should be paid only to those residing in rented/leased accommodation. It is not paid if the spouse is in receipt of HRA. The IT treatment also suggests that some valid rent receipt should also be furnished. Obviously, a rent receipt from a father or mother is also often submitted and is approved, but it is approved knowingly and considering it as a 'vegetarian corruption'!
From India, Kannur
Acknowledge(0)Amend(0)
If it is to be treated as an allowance not part of wages/salary, it should be paid only to those residing in rented/leased accommodation. It is not paid if the spouse is in receipt of HRA. The IT treatment also suggests that some valid rent receipt should also be furnished. Obviously, a rent receipt from a father or mother is also often submitted and is approved, but it is approved knowingly and considering it as a 'vegetarian corruption'!
From India, Kannur
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