Leave Encashment Calculator

Types of Leaves

As discussed, leave encashment is the amount of money that you get for all the leaves that went unused during your service after your retirement or leaving the company. It's a part of the final settlement that a company pays when an employee resigns or is terminated. Here are all the types of leaves:

Casual Leaves: These are the short-term leaves that you take for personal reasons. These don’t have to be planned you can take them without giving prior notice long before you take them. You can leverage these leaves for sickness or any personal emergencies.
Earned Leaves: These are the types of leaves that you earn at the end of every month. And you need an approval from your manager before you can take them and these are the leaves that get encashed depending on what your company policy is.
Medical Leaves: As the name suggests these are the type of leaves that female employees get. They are available for pregnancy reasons and depending on the company policy, they can be anywhere from 12 weeks to 26 weeks. Any extended time or leaves taken beyond this point may or may not be eligible for payment—again it also depends on the company policy.
Sabbatical Leaves: These are long-term leaves that might be given to employees for several different reasons like certifications or courses, they’re also paid leaves and may be cashed out.
Holiday Leaves: These are also paid leaves, which are not reduced from the salary of the employee. Many companies offer them to their employees.
Maternity Leaves: These leaves are given to employees for medical reasons. If the manager or HR approve them for the employee, these may also be available for encashment.

What is Leave Encashment Calculator

Leave encashment calculator is a tool that enables you to figure out how many leaves you’ll have or how many of them are taxable. So, that you can finally determine the amount you’ll get.

How to Calculate Leave Encashment

There are two ways that you can calculate your leaves encashment—manually and automatically with the help of a calculator.

To do it manually, you can do it depending on the basic salary and number of earned leaves you have.

For instance, let’s say, you retired after 20 years of service and you had 20 days of paid leaves given to you annually. Now, you’ll have a total of 400 leaves.

Out of all these, let’s say you already used 80 leaves, so you’ll deduct from the total number of leaves. Then depending on what basic salary you receive and your dearness allowance per month, you’ll calculate your taxable leaves by dividing your basic salary + dearness allowance from the product of the total unused leaves and 30.

Leaves eligible for encashment = Basic Salary/(30 X Unused Earned Leaves)

Now, to calculate leaves encashment amount automatically, you’ll need to use an leave encashment calculator tool. We have discussed that below in detail.

How to Use Leave Encashment Calculator

To use the leave encashment calculator, just enter the details that are required in the form of the calculator that you’re using. For instance, if you’re using HROne Leave Encashment calculator, you’ll need to enter basic salary and your number of earned leaves, and depending on that, you’ll get your answer.