Leave encashment is the amount of money an employee receives in exchange for the leaves not utilized from the paid leaves given by an organization in a year.
Under the Employment Act [Part 60E (3) and 60I (1A)], the minimum leave pay should be calculated using 26 workdays to arrive at the ordinary pay rate (Monthly salary / 26).
However, as every company has a different leave policy when it comes to prorating annual leave, determine the number of working days based on the relevant policy. You may refer here for pro-rated salary calculations that suites your company policy.
Add 'Leave balance amount' under "Earnings" on payroll
In the event an employee leaves the company, Swingvy will automatically prorate the remaining annual leave balance once the admin assigns an offboarding date. Based on the remaining balance, you can follow the steps below to process leave encashment:
Step 1 - Go to Payroll > Run payroll > Select relevant payroll and click on the affected employee
Step 2 - Under "Earnings", click "Add addition" and select 'Leave balance amount'
Step 3 - Manually calculate the daily rate of the resignee's base salary and multiply it by the remaining annual leave balance
Example (calculation based on 26 working days per month)
Base salary per month = RM 3,000
Unused remaining annual leave balance = 10 days
Daily rate = RM 3,000/26 = RM 115.38
Total encashment = RM 115.38 x 10 days = RM 1,153.80
Note:
Annual leave encashment is subject to all statutory deductions. When utilizing Swingvy Payroll, the statutory deduction will be automatically applied.