Leave Encashment

Leave Encashment

Every salaried person as per labor law is entitled to a minimum number of paid leave every year. However, it is not necessary that an individual employee utilities all the leave he is entitled for a year. In fact, most employers allow the employees an option of carrying forward such unutilised paid leaves. This would invariably leave the employee with an accumulated unutilised leave balance at the time of retirement or resignation from the company as the case may be. This compels the employer to compensate the unutilised paid leave of the employees. This concept is better known as leave encashment.

Any leave encashed during service is fully taxable and forms part of ‘income from Salary. However, a relief under Section 89 can be claimed.

Role

1. Finance Admin
2. Leave Admin
3. Staff/Faculty

Path

Salary » Other Reports » Leave Encashment Report

Inputs Needed

• Leaves can be encashed on for those leaves which are configured as Encashable.
• Employee should be eligible for leave encashment.
• Salary must be published.

Functionality

• To view the list of employees who have applied for leave encashment.
• Individual employee wise Leave encashment history can be viewed.
• Payment voucher can be generated for leave encashment for individual employee.

Steps to apply for Leave Encashment:

1. Encashment request from Staff/Faculty

• When an employee requests for encashment from his/her login, defined minimum balance of that leave is required.
• If employee has balance less than the defined minimum balance, system does not allow to proceed further.

2. Special encashment request from leave admin

• If employee does not have balance more than the minimum defined, leave admin can add encashment request on behalf of the employee.
• In this case minimum balance condition is by-passed.
• Thus, it is known as ‘Special Leave Encashment Request’.

3. Provision to upload necessary documents for encashment.

4. Once request is submitted, it is forwarded to alternate and reporting managers for approval.

5. The request is forwarded to finance admin for final approval once it has been approved by the reporting manager.

6. After the request has been approved by finance admin, payment voucher is generated.

7. Leave Encashment Amount = (Last Basic+DA/30Days)*No of Balance Earned Leave.

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