Query from a user:

Background:

a. Notice of leaving the ABC company (a pvt. Ltd. co.) sent through email to the director on August 12, 2007.

b. Left the job from ABC company in the mid of the month i.e. September 24, 2007 to join another comapny (company XYZ-a limited company).

c. Notice period of ABC company was of 3 months. I served 42 days i.e. from August 12, 2007 to September 24, 2007)

d. Company says it has a policy (which was available on the intranet of the company) that Notice Pay and Leave balance will be calculated on CTC basis and not on basic + DA + Commission etc. But i never seen or signed such policy.

e. Leave encashment as per company policy is 24 days.

f. Company was working 5 days a week i.e. Monday to Friday.

Query:
a. What should be the period of ten months for calculation of 10 months average salary i.e.
- 10 months immediately prior to date of leaving the company
which is from November 25, 2006 to September 24, 2007. or
- 10 months immediately prior to the month in which i left the
company which is November 1, 2006 to August 31, 2007.

b. The calculations should be done on the basis of basic + DA + Commission, if any or on the basis of CTC (CTC is much higher that basic).

c. How average formulea should be applied on 10 months average salary:
- 10 months salary / 10 (months); 10 months salary / 300 (days);
OR
- 10 MONTHS SALARY / 12 (months); 10 months salary / 365 (days)

d. Is it correct to calculate earned leave balance for 24 days based on one day salary arrived at as per any of the above formula in 'C'.
Or
One month should be considered of 22 days (30 days i.e. total days in a month - 8 days i.e. holidays in a month) or of 30 days for calculation of earned leave salary.

Thanks

Hi,

Unfortunately, the leave encashment rules vary between companies, and follow the ?service rules? of the company. Therefore, I feel that in your case, the company's policy might prevail.

Here is some information that should apply in your case:

1.The period of 10 months should be the last ten months immediately preceding the job change. Thus, it should be 10 months immediately prior to the month in which you left the company, which is November 1, 2006 to August 31, 2007.

2.Leave Encashment Salary: This can take into account Basic, Basic+DA or gross salary (which would be equivalent to CTC). But again, it varies from company to company, and ultimately depends on the company policy. Although I would like to mention that it is not uncommon for companies to consider CTC for leave encashment. (In fact, this actually increases the amount received by employees if they are actually encashing their leaves!)

3.Your monthly average salary would be (10 months salary) / 10 = 1 month's average salary.

4.Calculating Salary for 1 day: Unfortunately, this also varies from company to company, and depends on the company policy. It can be:
a)1 month's average salary / 22 days, or
b)1 month's average salary * 12 / 365

5.The earned leave balance for 24 days would be 24 * value arrived-at above.

Hope this information helps. Also, since the matter is complicated, I recommend that you consult a local expert.

Does anyone else have more advice on this?