Our system's leave encashment formula is based on MOM's guidelines found here.
For a monthly rated employee, the formula depends on the number average work days per month as stated in the employee's pay scheme.
Leave encashment formula: (Gross Salary x 12 months) / (Avg no. of work days x 52 weeks) x No. of leave days left
Employee works a 5 day work week in the below pay scheme and earns $2,500/monthly
In this case, since they work 5 days a week on average and there are 52 weeks in a year, the total number of working days is 5 days x 52 weeks = 260 days
To calculate the gross rate of pay per day based on a $2,500/month salary, the yearly pay is $2,500 x 12 = $30,000
If this employee has 5 days of leave left, the encashment formula would be:
$30,000/260 x 5 days = $576.92
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