Encashment of leave earned leave / pl

Azim A. Charania (Querist) 30 May 2013 This query is : Resolved
Dear Club Members,

Need your advise about encashment of earned leave

Q . It should be on Gross salary OR on Basic + DA/ Special Allowance declared by Govt half yearly or yearly.

Q The above amount to be divided by 26 days or 30 days for calculating the encashment amount.

Azim Charania

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Kumar Doab (Expert) 30 May 2013
Earned Leave:

---- Factory Act: Rate As per : Section 79 in The Factories Act, 1948…

Wages as per: Section 80 in The Factories Act, 1948….

80. Wages during leave period.
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. ……………..
(2) The cash equivalent of the advantage accruing through the concessional sale to the worker of foodgrains and other articles shall be computed as often as may be prescribed………….

-----Shops and Establishments Act (of the state):

e.g. Delhi Shops and Establishments Act:

(Rate as per): 22. Leave:………..

(Wages as per): 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);}

{8. Employment of adults, hours of work:

COMMENTS
(a) Mode for calculation of overtime wages:………………………..

when payment is made on monthly scale of pay, the daily rate of wages for a worker can be obtained only by dividing the amount of wages for 30 days by 26. This is done because the workman is
entitled to four days as weekly rest during which period he does not work. The reason is that workman actually gets monthly wages for the work done only for 26 days. Thus for a workman, it is the actual receipt for 26 days which is his monthly scale of pay, i.e., 30 days wages. Therefore,
a day’s wage should mean the result obtained by dividing the monthly wages by actual number of working days, i.e., 26 days. This principle will, however, be applicable in case of such workers who get monthly wages only for the actual number of working days.}

If leave policy of the company offer better terms no one shall object.