Friday, March 14, 2008

Leave encashment not included in wages for PF calculation

The term 'basic wage' which includes all emoluments
which are earned by an employee while on duty or on leave or
on holidays with wages in accordance with the terms of the
contract of employment can only mean weekly holidays,
national holidays and festival holidays etc. In many cases the
employees do not take leave and encash it at the time of
retirement or same is encashed after his death which can be
said to be uncertainties and contingencies. Though provisions
have been made for the employer for such contingencies
unless the contingency of encashing the leave is there, the
question of actual payment to the workman does not take
place. In view of the decision of this Court in Bridge Roof's
case (supra) and TI Cycles's case (supra) the inevitable
conclusion is that basic wage was never intended to include
amounts received for leave encashment.

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