Leave Encashment by the Employee

Such wages earned do not form part of regular pay ane hence not qualified for ESI. Encashment of earned leave will be arrived from basic and da - but ESI is to be paid on gross.

As per the recent judgement by the apex court, there PF is not applicable on earned leave encashment.

-Saravana Rajan

Dear SIr,

ESI and EPF are different concept and leave encashment is a different process.

As per ESI Act, employer contribution to ESI is essential and he has to pay it as he is obigated to pay for it. The leave encashment is that you have worked on leave days which can be availed by you as per the rules of employment and as you have not availed that leave, the employer has paid you the leave encashment. I am not aware of the related case law relating to these issues. 

 

Thank Q Very much for your reply.

Bhaskar.A.

The contributions payable in respect of each wage period shall ordinarily fall due on the last day of the wage period and where an employee is employed for part of the wage period, or is employed under two or more employers during the same wage period, the contributions shall fall due on such days as may be specified in the regulations. (section 39 (4) of the act.

ESI contribution is entirely different from leave encashment.ESI is a medical benefit enjoyed by the workers, the contribution cannot be encashed.whereas leave encashment is a sum amount paid to the workers who hav not enjoyed the leave days permitted by law/standing order.

Dear Mr Rao

ESI contribution and Leave Encashment both are different things as per statutory law.

ESI related with various benifits and Leave Encashment related with Cash value against the earnd leave. 

To be clear and short the amount an employee earns by encashing his earned leave (1 day for every 20 worked days as per law) DOES NOT QUALIFY FOR ESI OR PF BENEFITS.

NO ESI & PF ON EL ENCASHMENT.

-Saravana Rajan.

Dear All,

Your replies is valuable. But as per ESIC Rule we have to pay the contribution on every earning whoses calculation based on monthly wages.

If there is any judgement or rule that we not have to pay ESI contribution on Leave Encashment plz provide me also.

Tks/Rgds

Jitender Singh

 

Dear Mr. Gupta,

As per your view Wages & ESI also different things.

Rgds/Jitender

 

Hi,

Earned leave encashment is not regular payment / not a regular earning for an employee and hence does not attract ESI deduction. Moreover, employees opt for such encashments at the time of leaving the organisation and if there is any deduction for ESI at that point of time, it is not going to benefit the employees in any ways.

Any payment not made at regular time intervals does not attaract ESI deductions.

Pls correct if I am wrong.

-Saravana Rajan

Dear all,

Not only for leave encashment ESI & PF is not applicable for bonus and gratuity also.

The following shall be considered as Wages for the purpose of charging the contribution 1.Basic pay 2.D.A 3.HRA 4.O.T wages 4.Production Incentive 5.Night shift 6.Attendance Bonus.

So as per act ESI & PF is only for wages not for any other lumpsum amount.

Clear.

This reply by Pragadeesh serves the answer better.

-Saravana Rajan