Sunday

Calculation of Leave Encashment

What is the formula use to encash Annual Leave balance?


To encash the annual leave, we need to know how much is the per day rate for the employee.

Annual leave is based on a yearly basis, so we cannot use any particular month as a base to calculate the per day rate, but we need to find the per day rate with a yearly base.


To find the yearly salary, we need to use monthly salary x 12 months
To find the total working days per year, we need to use working days per week x 52 weeks

To find the daily rate, we need to use yearly salary divided by total working days



Example:

Leave Balance = 10 days
Monthly Salary = $2000
Working day per week = 5 days



Yearly salary = $2000 x 12 months = $24,000
Total Working days = 5 days x 52 weeks = 260 days
Daily rate = $24000 / 260 days = S$92.31
Total Encashment = 10 days x $92.31 = $923.10