Encashment from basic pay and unused days
Opens on Rs. 50,000 basic, a divisor of 30, 10 unused days and 1x. That is Rs. 1,666.67 a day and Rs. 16,667.
Many policies encash on basic only. Some use gross. Match your leave policy.
26 and 30 are both common. Pick the rule in your policy.
Illustrative encashment
- Monthly basicRs. 50,000
- Daily rateRs. 1,666.67
- Unused days10
- Multiplier1x
- Days × daily rate × multiplierRs. 16,667
- 1Daily rate = monthly basic ÷ working-day divisor
- 2Encashment = unused days × daily rate × multiplier
- 3Show the daily rate to 2 decimals
- 4Round the payout to the nearest rupee
What leave encashment means
Leave encashment is paying cash for unused leave instead of time off. Policies differ on whether annual leave can be encashed during service, only at year-end, or only at exit with final settlement. The statutory minimums for annual, casual and sick leave are in labour law leave entitlements, and how a company writes the policy is in the leave management guide.
Basic vs gross
Many Pakistani employers encash on basic pay only. If your policy uses gross, or basic plus house rent, change the monthly figure and document the rule in the leave policy. The divisor is the same kind of choice: 26 and 30 both appear in payroll practice. Pick one and use it for everyone on that policy.
Tax and payroll
Leave encashment paid with salary is generally treated as part of taxable salary income unless a specific exemption applies. Confirm that with your tax adviser. Show the payout as its own line on the payslip, the way the salary slip format separates other earnings from tax and EOBI. StreamHCM keeps the leave balance and the pay run on the same employee record. See leave management software and payroll software for Pakistan.
Statutory maternity leave is not annual leave for encashment. Duration and pay for that leave are in maternity leave in Pakistan.
This page is an estimate only. It is not legal advice. Confirm the amount against your leave policy and the provincial law that applies before anyone is paid.
Leave encashment questions
Daily rate is monthly basic divided by the working-day divisor in the policy. 26 and 30 are both common. Encashment is unused leave days times that daily rate times the policy multiplier, often 1. The form opens on Rs. 50,000, a divisor of 30 and 10 days: Rs. 1,666.67 a day and Rs. 16,667.
It is policy and contract driven. Check the leave law that applies to the establishment. Unused annual or earned leave is commonly paid on exit where the law or the contract says so. Casual and sick leave usually are not.
Many Pakistani employers encash on basic pay only. If the policy uses gross, or basic plus house rent, enter that figure and write the rule in the leave policy.
Leave encashment paid with salary is generally treated as part of taxable salary income unless a specific exemption applies. Confirm with a tax adviser, and show it as a separate payslip line.
No. It is an estimate only. Confirm it against your leave policy and the provincial law that applies.
Run this in live payroll, not a spreadsheet
StreamHCM applies the same FBR slabs, attendance rules, EOBI and expense-claim logic across every employee, then generates the payslip.