Payment of Variable pay on Earned/ Privilege Leave

What is the policy on variable salary to employees during their privilege leave/ earned vacation?
We contend that the employee is not paid any variable salary since he was on vacation and there is no activity and as such variable salary is based on variable salary.

In my Company till there is Leave Balance we pay all the Variable Pay which is part of CTC but once Leave exhausted we don't.

Dear colleague,
During authorized leave period , all components of monthly salary is payable which is very wide spread and predominant practice. It is only when he is on loss of pay that proportionate salary and variable allowances are deductible.
Vinayak Nagarkar
HR- Consultant