Calculation for leave encashment,bonus & gratuity
R.Ramesh
(Querist) 21 March 2014
This query is : Resolved
Good Evening Sir,
As per current existing law in private sector Leave Encashment ,Bonus and Gratuity for employees whether it should be paid on Gross salary or Basic Salary. Thanking you
Kumar Doab
(Expert) 21 March 2014
Depending upon what is this establishment: Commercial, Industrial, The Small Enterprise you may go thru:
-------Shops and Commercial Establishments Act of the state
--------Factory Act: Sec79
-------- The Small Enterprises (Employment Relations) Act 2002: Chapter IV: conditions of work
The leave policy of the company should be in line with the enactments applicable to it and can offer better and superior ( but not inferior) benefits as per its Certified Standing Orders, negotiated bilateral agreements, appointment letter……………..
>>> Leave Encashment:
The Delhi Shops and Establishments Act, 1954:
23. Wages during Leave.—Every employee shall be paid for the period of his leave at a rate
equivalent to the daily average of his wages for the days on which he actually worked during the
preceding three months, exclusive of any earnings in respect of overtime but inclusive of
dearness allowance.
{2. DEFINITIONS : (30) “wages” means wages as defined in section 2 of the Minimum Wages Act, 1948 (11 of 1948);}
Same is in case of Bombay Shops and Establishments Act.
Whereas in case of :
Andhra Pradesh Shops and Establishments Act: it is WAGES DURING THE PRECEEDING MONTH.
32. Pay during leave and holidays :- Every employee shall, for the period of the leave allowed under sub sections (1) (5) of Section 30 or the holidays allowed under Section 31, be paid at a rate equivalent to the daily average of his wages for the days on which he actually worked during the preceding month exclusive of any earning in respect of overtime.
You may go thru the definition of wages in Shops and Establishments Act of the state.
----Factories Act 1948: Sec80: (1) For the leave allowed to him under 1[section 78 or section 79, as the case may be,] a worker 2[shall be entitled to wages] at a rate equal to the daily average of his total full time earnings for the days on which 3[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:
(3) The State Government may make rules prescribing -
(a) the manner in which the cash equivalent of the advantage accruing through the concessional sale to a worker of foodgrains and other articles shall be computed; and
>>> Bonus: THE PAYMENT OF BONUS ACT, 1965: 2(21): Basic + DA
>>> Gratuity: Payment of Gratuity Act: 2(s): Basic + DA
