How is Leave Encashment Calculated?
At the time of leaving a company (resignation or retirement), you are entitled to cash out your unused Earned Leaves (EL) or Privilege Leaves (PL). This is known as Leave Encashment.
The Formula
Usually, companies calculate your per-day salary by taking your Monthly Basic Pay (plus Dearness Allowance, if applicable) and dividing it by the working days in a month. Thus, the formula is:
Leave Encashment = (Basic + DA) / (Days in month) × Unutilized Leave Days
While government sectors and traditional manufacturing usually use a 26-day divisor (excluding 4 Sundays), many modern private companies use a 30-day divisor. You can select your company's method in our calculator to get an exact figure.