Can Leave encashment be on basis salary and notice recovery on gross salary

Hi 

 

Our company is recovering notice period on gross salary and paying leave encashment on basic salary. Is it possible to have different basis for notice period and leave encashment ?

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Quick Summary
This discussion explores the common practice of calculating leave encashment based on basic salary while recovering notice periods on gross salary. It questions the fairness and legality of this approach, highlighting that leave salary for tax purposes often includes Dearness Allowance (DA). The conversation touches upon how such policies might inadvertently encourage employee absenteeism.

Leave encashment should be based on basic salary and DA

Corporates usually have internal policies which are more beneficial to them.

Leave salary for the purpose of exemption (or otherwise) under income tax act is calculated on basic + DA.

Gross salary is not deducted. So it is not used. Does your company give profit bonus for high employee turnover? No one paid me profit of 3% for turning out everyday as well.

Ok now I understand why my colleagues used to work recklessly so that one’s mind and body will attenuate ebullience and fall I’ll and take leave. That is why there is chaos n the floors and it is encouraged as well.

I meant ‘ones body and mind gets attenuated of ebullience and fall ill.’

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