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Leave Encashment Formula:
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Leave encashment is the process of converting unused earned leave days into monetary compensation. This calculation helps determine the financial value of accumulated leave days that an employee hasn't used during their employment period.
The calculator uses the leave encashment formula:
Where:
Explanation: The formula calculates the per-day salary (Basic Salary + Dearness Allowance divided by 30 days) and multiplies it by the number of earned leave days to determine the total encashment amount.
Details: Accurate leave encashment calculation ensures fair compensation for employees, helps organizations budget for employee benefits, and maintains compliance with labor regulations and company policies.
Tips: Enter basic salary and dearness allowance in currency units, and earned leave in days. All values must be non-negative numbers.
Q1: Why divide by 30 in the formula?
A: This assumes a 30-day month for calculating the per-day salary, which is a standard practice in many organizations for leave encashment calculations.
Q2: Are there different calculation methods?
A: Yes, some organizations might use actual calendar days or different divisors. Always check your company's specific policy for accurate calculation.
Q3: Is dearness allowance always included?
A: This depends on company policy and local labor laws. Some organizations include only basic salary, while others include various allowances.
Q4: Are there tax implications for leave encashment?
A: Yes, leave encashment may be taxable income depending on the amount and local tax regulations. Consult a tax professional for specific advice.
Q5: Can this calculator be used for different currencies?
A: Yes, the calculator works with any currency as long as you're consistent with the currency units for both salary inputs.