Suppose the salary of a person has the following components:
1) Basic: 15000
2) DA: 2000
3) Other allowance: 3000
4) Total gross salary: 20,000
He has 5 days of earned leave. The employee is retired. Then encashment is to be calculated based on whether the total gross salary is Rs 20,000, i.e., 20000 / 26 Days X 5 days = Rs 3846 or (BASIC + DA) / 26 * 5 = 17000 / 26 x 5 = Rs 3269.00.
PLEASE EXPLAIN
From United Kingdom, London
Acknowledge(0)
Amend(0)
31) Basic: 15000
2) DA: 2000
3) Other allowance: 3000
4) Total gross salary: 20,000
He has 5 days of earned leave. The employee is retired. Then encashment is to be calculated based on whether the total gross salary is Rs 20,000, i.e., 20000 / 26 Days X 5 days = Rs 3846 or (BASIC + DA) / 26 * 5 = 17000 / 26 x 5 = Rs 3269.00.
PLEASE EXPLAIN
From United Kingdom, London
Acknowledge(0)Amend(0)
Suppose a worker has EL of 5 days.
Basic: 12,000.00
DA: 5,000.00
OTHER ALLOWANCE: 3,000.00
NET PRESENT DAYS: 20
WEEKLY OFFs: 4
EL availed: 3
absent: 30
------------------------------
total days: 30
1) Gross salary = 20,000.00 / 26 x 3 (absent days) = 20,000.00 - 2,307.70 = 17,692.30
2) Gross salary = 20,000.00 / 26 x 3 (absent days) - 3,000 (other allowance for 3 days EL availed) / 26 x 3 (3 days EL availed) = 20,000.00 - 2,307.70 - 346.16
In the second case, I have taken into consideration the deduction of the allowance amount for 3 days EL availed. Which one is correct?
From United Kingdom, London
Acknowledge(0)Amend(0)
Basic: 12,000.00
DA: 5,000.00
OTHER ALLOWANCE: 3,000.00
NET PRESENT DAYS: 20
WEEKLY OFFs: 4
EL availed: 3
absent: 30
------------------------------
total days: 30
1) Gross salary = 20,000.00 / 26 x 3 (absent days) = 20,000.00 - 2,307.70 = 17,692.30
2) Gross salary = 20,000.00 / 26 x 3 (absent days) - 3,000 (other allowance for 3 days EL availed) / 26 x 3 (3 days EL availed) = 20,000.00 - 2,307.70 - 346.16
In the second case, I have taken into consideration the deduction of the allowance amount for 3 days EL availed. Which one is correct?
From United Kingdom, London
Acknowledge(0)Amend(0)
Dear Mohan,
Before reading my answer to your query, I would like you to have a receptive mind to my following observations as a prelude to my answer; okay?
1) Salary is the total remuneration payable to the employees for any wage period as per the contract of employment. In order to retain the employees and to contain the indirect statutory financial commitments of the employer to a certain extent, the total salary or gross salary is divided into basic and other allowances. Again, these allowances are also in the nature of compensatory and reimbursable, depending on the place and the nature of work. Generally, compensatory allowances are treated as part and parcel of the salary for the work done by the employees, while allowances of a reimbursable nature such as conveyance, night shift allowance, etc., are considered to be paid for actually attending to work.
2) Normally, the wage period mentioned in the contract of employment would be a month. A month is considered to comprise 30 days for the purpose of convenience of calculation, and the monthly salary mentioned in the contract of employment would be fully paid irrespective of the actual number of days in a month.
There is no break-up for the other allowances in your post. Any leave surrendered for cash benefit is the entitled period of paid absence not availed of by the employee for obvious reasons. Had the employee availed the leave, would you not have paid him the gross salary minus the reimbursable allowances? In my opinion, the same analogy holds good in the calculation of leave encashment.
From India, Salem
Acknowledge(0)Amend(0)
Before reading my answer to your query, I would like you to have a receptive mind to my following observations as a prelude to my answer; okay?
1) Salary is the total remuneration payable to the employees for any wage period as per the contract of employment. In order to retain the employees and to contain the indirect statutory financial commitments of the employer to a certain extent, the total salary or gross salary is divided into basic and other allowances. Again, these allowances are also in the nature of compensatory and reimbursable, depending on the place and the nature of work. Generally, compensatory allowances are treated as part and parcel of the salary for the work done by the employees, while allowances of a reimbursable nature such as conveyance, night shift allowance, etc., are considered to be paid for actually attending to work.
2) Normally, the wage period mentioned in the contract of employment would be a month. A month is considered to comprise 30 days for the purpose of convenience of calculation, and the monthly salary mentioned in the contract of employment would be fully paid irrespective of the actual number of days in a month.
There is no break-up for the other allowances in your post. Any leave surrendered for cash benefit is the entitled period of paid absence not availed of by the employee for obvious reasons. Had the employee availed the leave, would you not have paid him the gross salary minus the reimbursable allowances? In my opinion, the same analogy holds good in the calculation of leave encashment.
From India, Salem
Acknowledge(0)Amend(0)Engage with peers to discuss and resolve work and business challenges collaboratively - share and document your knowledge. Our AI-powered platform, features real-time fact-checking, peer reviews, and an extensive historical knowledge base. - Join & Be Part Of Our Community.
Sumary of Annual Leave--Sample.x ls
Approval of Annual Leave.docx
LEAVE ENCASHMENT NOT INCLUDED IN WAGES FOR P. F. CALCULATION.pdf