Hi,
Can anyone help me out with the basis for calculation of leave encashment.
Present in our co we are calculating Leave encashment on the basic salary only.
Is it alright or we need to calculate leave salary on the monthly gross entitlement of the employee. Is their any enactment related to this ?
Waiting for some fruitful feedback.
Regards,
Subhabrata Basu
From India, Delhi
Can anyone help me out with the basis for calculation of leave encashment.
Present in our co we are calculating Leave encashment on the basic salary only.
Is it alright or we need to calculate leave salary on the monthly gross entitlement of the employee. Is their any enactment related to this ?
Waiting for some fruitful feedback.
Regards,
Subhabrata Basu
From India, Delhi
Dear Subhabrata,
Leave Encashment and Notice period are both similar for the Organization.
Hence the basis for both remain the same. If a organization deducts Notice Period shortage on Basic salary the Leave encashment is also done on Basic salary but only in F&F.
Some organizations also apply this formula for any leave encashment allowed over and above a permissble to keep numbers.
Every thing will depend on the organizational environment, if it has got sufficient leaves provided, and have not restriction on leave approvals ( bussiness does not deny leave to employees ) then it can fix the restrictions to avoid misuse and uncessary cash out flow.
For example, the work pressure is not much and employees can take leave as and when wanted, thus organization can fix limits on leave Carry forwarded and the encashment can happen only after X no. of leaves accumulation or during the employee exit.
Its the organizational need which dictates how it want this cost to feature as empowering / restrciting / controling.
Regards,
Shridhar Bhagwat
From India, Mumbai
3Leave Encashment and Notice period are both similar for the Organization.
Hence the basis for both remain the same. If a organization deducts Notice Period shortage on Basic salary the Leave encashment is also done on Basic salary but only in F&F.
Some organizations also apply this formula for any leave encashment allowed over and above a permissble to keep numbers.
Every thing will depend on the organizational environment, if it has got sufficient leaves provided, and have not restriction on leave approvals ( bussiness does not deny leave to employees ) then it can fix the restrictions to avoid misuse and uncessary cash out flow.
For example, the work pressure is not much and employees can take leave as and when wanted, thus organization can fix limits on leave Carry forwarded and the encashment can happen only after X no. of leaves accumulation or during the employee exit.
Its the organizational need which dictates how it want this cost to feature as empowering / restrciting / controling.
Regards,
Shridhar Bhagwat
From India, Mumbai
Dear Mr.Subhabrata,
Leave enchasment policy depends upon the company policy.
1.Minimum enchsement is on the basic salary of an employee.
2.If you go above it like on the gross salary then no govt official will ask why you give more because all rules are made for the benefit of employees.
3.So you check with your standing order or HR manual for more details.
For any query you may get back to us.
Regard's
Shaikh
From India, Bhubaneswar
Leave enchasment policy depends upon the company policy.
1.Minimum enchsement is on the basic salary of an employee.
2.If you go above it like on the gross salary then no govt official will ask why you give more because all rules are made for the benefit of employees.
3.So you check with your standing order or HR manual for more details.
For any query you may get back to us.
Regard's
Shaikh
From India, Bhubaneswar
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LEAVE ENCASHMENT NOT INCLUDED IN WAGES FOR P. F. CALCULATION.pdf
Leave Encashment & Salary Calculation.xls x