Dear All, Need quick clarification: As per Tamil Nadu S&E Act, leave encashment calculation is based on last drawn basic salary or fixed gross salary, which one is correct. Could anyone please share Act copy which clearly states encashment calculation. TIA
As per the Tamil Nadu Shops and Establishments Act, 1947, Section 22 (1), the calculation for leave encashment should be based on the last drawn wages, including basic wages and dearness allowance.
Here’s the exact text from the act:
"22(1) The leave with wages shall be credited to the leave account of an employee at the rate of one day for every twenty days of work performed by him during the previous calendar year. Provided that an employee shall be entitled to carry forward any leave not availed of during the previous calendar year subject to a maximum of sixty days at any time. The leave with wages so carried forward shall be in addition to the leave of sixty days which may be earned in the subsequent calendar year:
Provided further that the leave with wages accumulated in the account of an employee shall not exceed one hundred and eighty days:
Provided also that the wages payable during the leave with wages shall be at the rate equal to the daily average of his total full-time earnings for the days on which he has worked during the month immediately preceding his leave exclusive of any overtime and bonus but inclusive of dearness allowance and the cash equivalent of the advantage, if any, accruing to the employee from the supply of essential commodities at concessional rates."
Therefore, it is clear that the calculation for leave encashment should be based on the last drawn wages, including basic wages and dearness allowance.
Thanks for your prompt response, Vikash.
What does it mean “last drawn wages, including basic wages and dearness allowance” - is it just Basic & DA or last drawn wages i.e. gross pay including basic and DA.
Also, as per Act maximum allowed carry forward days is 45 or 60days? Kindly clarify.
If permissible, could you please share the link for leave act copy. Thanks a lot in advance.