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Subrata Chakraborty (Manager (Comm.))     29 October 2013

What is the rule for encashment of earned leave?

Please let me know the exact rule for encashment of Earned Leave. Some companies pay on the basis of Gross Salary and some pay on the basis of Basic + D. A. only.


 5 Replies

Rama chary Rachakonda (Secunderabad/Highcourt practice watsapp no.9989324294 )     29 October 2013

As per the Factories Act, it is :
(Basic+DA) / 26 * No of Encashment Days.

But this is flouted by most companies for their benefit as they calibrate the rule as under
(Basic+DA) / 30 * No of Encashment Days

1 Like

Kumar Doab (FIN)     29 October 2013

If the establishment is Factory: Sec 79: Current per day salary in place of Basic+DA should be accounted for which monthly wages should be divided by 26.


If the establishment is Shop & Commercial Establishment: This act of respective state may be referred to: e.g Delhi: Sec23: @ Daily Average wages


If the establishment is Small Enterprise: The Small Enterprises( Employment Relations) Act 2002: chapter IV - conditions of work may be looked into.

1 Like

Sudhir Kumar, Advocate (Advocate)     30 October 2013


Subrata Chakraborty (Manager (Comm.))     31 October 2013

Thank you Mr. Ramachary, Mr. Doab, Mr. Sudhir Kumar. But When an employee is absent, his gross salary is deducted, then leave should also be encashed on Gross pay.

Kumar Doab (FIN)     31 October 2013

Persue with company.

You will get @ Gross pay.

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