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Old 4th February 2010, 15:35   #1
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Default Query on leave encashment - Gross Salary or Basic?

Guys, I have a doubt and would appreciate if I can get an answer at the earliest.

Lets assume a company utilizes contract workers from a manpower services provider. i.e eg: tiktaktoe is a manpower services provider. boyboy works for tiktaktoe. But he is deputed at a zimcola, an MNC. boyboy will have a zimcola id card (contractor), but he will get his salary slip from tiktaktoe.

So, boyboy will have 18 Earned Leaves (EL) apart from 12 Casual leaves.

The Earned leaves are encashable. boyboy's salary is as follows:
Basic: Rs.3009
DA/VDA: Rs.720
HRA: 3108
Conveyance: Rs.6013
Gross: 12,850

So what is the amount he will get if he encashed 18 leaves? is it 12,850/30 days*18 leaves?

Is there any specific labour law in India that prescribes the rate of encashable leaves? (I mean is it based on gross salary or only on base salary or is there different slabs for different companies?)

Your help in this highly appreciated.
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Old 4th February 2010, 15:40   #2
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Whatever HR i have learnt during my MBA- HR , it is mostlye basic. But it can vary with company policy.
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Old 4th February 2010, 15:41   #3
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The Rule differs from company to company and there is no standardisation

Last edited by Technocrat : 4th February 2010 at 17:34. Reason: Please avoid quotinga long post especially if its on same page, thanks
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Old 4th February 2010, 15:43   #4
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In my company they pay on the basic. In this case it would be 3009/30 *18 .
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Old 4th February 2010, 15:43   #5
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As far as I know labour law is not specific on this. Each company have their own rules. Good companies refund Earned Leaves accumulated on the basis on Basic+DA. in some companies Earned leaves when not taken just lapse without any payment.
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Old 4th February 2010, 15:44   #6
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Leave encashment is only on Basic part. You may confirm form your HR depending on the policies of your company.
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Old 4th February 2010, 15:47   #7
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The reason I am asking is we have three different manpower services company. Two of them are paying on gross salary / 30 days * no of leaves. One company is paying basic salary /30 days * no of leaves.

Since all three are providing a similar service, why is there a different leave encashment policy?
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Old 4th February 2010, 16:49   #8
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As others have rightly pointed out, it is mostly on Basic.
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Old 4th February 2010, 17:00   #9
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shouldnt it be 3009*18/22 (average of 22 working days/ month)
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Old 4th February 2010, 17:10   #10
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The leave encashment may be basic or on gross depends on company policy but try to enquire that in what is the company taking back in case of notice peroid that is :

If company takes back from employee notice peroid shortfall on gross than leave encashment would also be gross & in case company take notice peroid shortfall on basic that leave encashment would be basic.

They cannot take one in gross amount & other in basic.

Rest refer to the company's compensation policy.
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Old 4th February 2010, 17:13   #11
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never encash the leave, rather spend it and enjoy it. In my company encashment is as per basic and not the gross salary.
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Old 4th February 2010, 17:15   #12
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Quote:
Originally Posted by throttleking View Post
never encash the leave, rather spend it and enjoy it. In my company encashment is as per basic and not the gross salary.

Your suggestion is good but the queery is somewhat different,
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Old 4th February 2010, 17:59   #13
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Thanks guys for the replies.

@anupam00 , even I am told the same thing. Am checking out the specifics. Will revert back here with details
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Old 4th February 2010, 19:09   #14
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Mostly its Basic, but many give Basic + HRA. This is the policy told to me by one company ( cant name it as requested by the person ).
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Old 5th February 2010, 01:59   #15
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Quote:
Originally Posted by anupam00 View Post
If company takes back from employee notice peroid shortfall on gross than leave encashment would also be gross & in case company take notice peroid shortfall on basic that leave encashment would be basic.

They cannot take one in gross amount & other in basic.

You are 100% correct. I've spent more than 2 decades in HR and can vouch for your statement.
In govt, basic + dearness allowance are considered, both for leave encashment as well as for notice period.

In private companies, it varies, but most use only basic pay. My company only used to pay encashment on basic, but from jan 1st we transitioned into an new company that takes hra and special allowances too into cognizance.
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