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Prasoon Banerjee (Operations Manager)     24 March 2012

Paid leave enchasment

Dear Friends,

 I am new to this forum and have a specific question whose reply is being sought from the Forum. I am professional and had been working with  an French MNC Bureau Veritas India Pvt Ltd. posted at Delhi.The company provides  30 days PL to its employees who has worked for one year with the organisation.

 My question arises - Encashment of PL.

I resigned from the services of the company after working for 3.8 years.

My PL accrued was of 45 days. During the full and final settelment For Leave Encashment the company is saying only Basic can  be encashed.Request the forum to guide accordingly.

My contract with company is on CTC basis . The salary componnent is broken up into

Basic / HRA / Car Allowance / LTA / Medical.( All components are linked as % of Basic)

If while on duty I take a PL then I am paid everything. But how while I am leaving the company the PL Encashment is only @ of Basic.

When a person is LWP then every thing is deducted on basis of Basic%.

The company - has a condition if somebody resigns he has to give three months notice or three months basic.

Please advice.


 3 Replies

Kumar Doab (FIN)     24 March 2012

You have posted that "For Leave Encashment the company is saying only Basic can  be encashed."





It is felt that the matter is more of a practice. The point of view of many in HR is “There is no provision for encashment of leaves under various Laws so encashment of leaves can be denied.” It is felt that the matter is more of a practice to grant leve encashment on basic.

 If you escalate and contest HR may seek opinion from Management/Labor Consultant and reply most probably shall be to refer to THE PAYMENT OF WAGES ACT, and to pay on the basis of gross salary.

You may read section 3*[(vi) of the act.

Valuable advice of learned experts/members is sought.


Kumar Doab (FIN)     24 March 2012

You may find the attachment useful.

8.         The leave salary for the period of encashment of leave shall be paid in full. No deduction on account of provident fund subscripttion, House rent allowance and repayment of any advance etc. shall be made from this amount. For calculating pay for one day, a month will be taken as consisting of 30 days. Salary means basic pay, Fixed Dearness Allowance, DA, CCA [and Hill compensatory allowance]#

(Ref.OO No.21 dated 7.12.2004)

Attached File : 780133815 leave encashment chap-15.doc downloaded: 209 times

Bhagwan Tolani (Salaried)     29 March 2012


This is perfectly correct settlement of your F & F.

For the encashment of PLs only basic salary calculates not all the component.


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