It is amusing to see so many diverse viewpoints and one's own interpretation of the query !!!
It is appalling to see so much confusion with a simple concept as Earned Leave; and I think it calls for an Act to have a Certifying Body for HR Managers.
In what directions should a company act if the concerned HRs give these kinds of contrary opinions??
Imagine the situation if the matter was about Medicine & Surgery; Civil Engineering or say, Finance ?? One can imagine the result.
I appreciate the correct inputs from Kumar S. and T.Sivasankaran.
Regards.
From India, Delhi
1426It is appalling to see so much confusion with a simple concept as Earned Leave; and I think it calls for an Act to have a Certifying Body for HR Managers.
In what directions should a company act if the concerned HRs give these kinds of contrary opinions??
Imagine the situation if the matter was about Medicine & Surgery; Civil Engineering or say, Finance ?? One can imagine the result.
I appreciate the correct inputs from Kumar S. and T.Sivasankaran.
Regards.
From India, Delhi
Dear Faruk
Pl go through this.
Factories Act, 1948 [sec - 80 (1)]
For the leave allowed to him under Section 78 or Section 79, as the case may be, a worker shall be entitled to wages at a rate equal to the daily average of his total full time earnings for the days on which he actually worked during the month immediately preceding his leave, exclusive of any overtime and bonus but inclusive of dearness allowance and the cash equivalent of the advantage accruing through the concessional sale to the worker of foodgrains and other articles:
They never mentioned other allowances. Its that Pay the Basic + DA + Cash equivalent that u would have paid if he would have come to the company.
Pl correct me If I'm Wrong
From India, Bangalore
Pl go through this.
Factories Act, 1948 [sec - 80 (1)]
For the leave allowed to him under Section 78 or Section 79, as the case may be, a worker shall be entitled to wages at a rate equal to the daily average of his total full time earnings for the days on which he actually worked during the month immediately preceding his leave, exclusive of any overtime and bonus but inclusive of dearness allowance and the cash equivalent of the advantage accruing through the concessional sale to the worker of foodgrains and other articles:
They never mentioned other allowances. Its that Pay the Basic + DA + Cash equivalent that u would have paid if he would have come to the company.
Pl correct me If I'm Wrong
From India, Bangalore
Dear All
As per the Act whether its S&E or Factory's Act it should be 36 days pa i.e EL 12, SL 12 and CL 12.
SL means Sick leave can be carry over to next year (discretion of the management) as the employee will not be sick in the current year but he or she can be next year for this purpose its carried over to next year and ITS NOT ENCASHABLE AMT
For CL and EL or PL its encashable by the company. In some company, LTA can be adjusted against their PL after submitting the proof.
As per the Act the leave policy is based on the calculation on BASIC + DA OR VDA not gross as this affects the employer outflow. BASIC + DA oR VDA / 30 * no of days available (basic will be last salary drawn as per the policy of leave)
any deviation pl infm me
regards
Vijayalakshmi J
Payroll Management consultant
From India, Chennai
As per the Act whether its S&E or Factory's Act it should be 36 days pa i.e EL 12, SL 12 and CL 12.
SL means Sick leave can be carry over to next year (discretion of the management) as the employee will not be sick in the current year but he or she can be next year for this purpose its carried over to next year and ITS NOT ENCASHABLE AMT
For CL and EL or PL its encashable by the company. In some company, LTA can be adjusted against their PL after submitting the proof.
As per the Act the leave policy is based on the calculation on BASIC + DA OR VDA not gross as this affects the employer outflow. BASIC + DA oR VDA / 30 * no of days available (basic will be last salary drawn as per the policy of leave)
any deviation pl infm me
regards
Vijayalakshmi J
Payroll Management consultant
From India, Chennai
As per Factories Act it is not 36 days .There is no provision of CL and SL in Factories Act.Regarding EL encashment Mr Yeshwant is right. Varghese Mathew 04712542059
From India, Thiruvananthapuram
From India, Thiruvananthapuram
Dear Sir,
My name is Ashish Rana i am working in a Delhi based company i just want to know that if our manpower is working as a contractor in a Haryana based company ( our customer ) then does it necessary for us to pay the leave encashment to our staff as per the "Haryana leave with wages rules" or we should pay the leave enashment as per "Delhi shops & establishment rules".
Please help.
Regards
Ashish Rana
From India, Jaipur
My name is Ashish Rana i am working in a Delhi based company i just want to know that if our manpower is working as a contractor in a Haryana based company ( our customer ) then does it necessary for us to pay the leave encashment to our staff as per the "Haryana leave with wages rules" or we should pay the leave enashment as per "Delhi shops & establishment rules".
Please help.
Regards
Ashish Rana
From India, Jaipur
no. of HR persons have told that EL should be on Basic Salary.
I dont know on which behalf they said,
Everyone must read that factory act because it has cleared all the query regards this read chapter 5
EL payment must be on total full time earning of employes (Note factory can be exempted from this section if they provide better leave facility to employees but it should be approved in standing order of Company)
So clearly it should be on gross salary
i also know that number of company are giving el encasement on basic it is totally illegal if they have not approved leave policy
From India, Faridabad
I dont know on which behalf they said,
Everyone must read that factory act because it has cleared all the query regards this read chapter 5
EL payment must be on total full time earning of employes (Note factory can be exempted from this section if they provide better leave facility to employees but it should be approved in standing order of Company)
So clearly it should be on gross salary
i also know that number of company are giving el encasement on basic it is totally illegal if they have not approved leave policy
From India, Faridabad
Hello Vani
Leave encashment does not includes the SL and CLs. As per most of the Shops and Establishment acts leave encashment is only on Earned leave. The caliculation is on Basic generally and varies from company to company as a practice.
Pl. refer to the appropriate leagal positions before posting anything.
From India, Hyderabad
Leave encashment does not includes the SL and CLs. As per most of the Shops and Establishment acts leave encashment is only on Earned leave. The caliculation is on Basic generally and varies from company to company as a practice.
Pl. refer to the appropriate leagal positions before posting anything.
From India, Hyderabad
The calculation of earned leaves (also known as accrued leaves or annual leave) and whether it's based on gross salary or basic salary depends on company policy and local regulations. Here's a breakdown of each approach:
Earned Leaves Based on Gross Salary:
In this approach, earned leaves are calculated based on the employee's total gross salary, which includes all components such as <a href="https://www.pockethrms.com/hr-terms/basic-salary/"> basic salary </a>, allowances, bonuses, and other benefits.
Using gross salary for earned leave calculations may result in a higher accrual rate, as it takes into account all forms of compensation received by the employee.
This method is often used by companies that want to provide employees with leave benefits that reflect their total compensation package.
Earned Leaves Based on Basic Salary:
Alternatively, earned leaves can be calculated based only on the employee's basic salary, excluding other components such as allowances and bonuses.
Using basic salary for earned leave calculations may result in a lower accrual rate compared to using gross salary.
This method is commonly used by companies as it provides a more stable and consistent basis for calculating leave entitlements, especially when other components of compensation may vary.
It's essential for employers to clearly define their policy regarding earned leave calculations in their employment contracts or company handbook to avoid any confusion or disputes. Additionally, they should ensure compliance with local labor laws and regulations, which may specify requirements for earned leave entitlements and calculation methods.
Ultimately, whether earned leaves are based on gross salary or basic salary depends on various factors, including company practices, employee agreements, and legal requirements. Employers should carefully consider these factors when determining the most appropriate approach for their organization.
From India, Mumbai
Earned Leaves Based on Gross Salary:
In this approach, earned leaves are calculated based on the employee's total gross salary, which includes all components such as <a href="https://www.pockethrms.com/hr-terms/basic-salary/"> basic salary </a>, allowances, bonuses, and other benefits.
Using gross salary for earned leave calculations may result in a higher accrual rate, as it takes into account all forms of compensation received by the employee.
This method is often used by companies that want to provide employees with leave benefits that reflect their total compensation package.
Earned Leaves Based on Basic Salary:
Alternatively, earned leaves can be calculated based only on the employee's basic salary, excluding other components such as allowances and bonuses.
Using basic salary for earned leave calculations may result in a lower accrual rate compared to using gross salary.
This method is commonly used by companies as it provides a more stable and consistent basis for calculating leave entitlements, especially when other components of compensation may vary.
It's essential for employers to clearly define their policy regarding earned leave calculations in their employment contracts or company handbook to avoid any confusion or disputes. Additionally, they should ensure compliance with local labor laws and regulations, which may specify requirements for earned leave entitlements and calculation methods.
Ultimately, whether earned leaves are based on gross salary or basic salary depends on various factors, including company practices, employee agreements, and legal requirements. Employers should carefully consider these factors when determining the most appropriate approach for their organization.
From India, Mumbai
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