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All-in-one HR platform · v2.0
14-day free trial · No credit cardhello@HrMagix.com
All-in-one HR platform · v2.0
14-day free trial · No credit cardhello@HrMagix.com
Enter employees, their average unused leave and average monthly wage to value the organisation's accrued leave balance as a liability for provisioning.
Unused earned leave that employees can carry forward or encash is an amount the organisation may have to pay. This leave liability calculator puts a rupee value on that balance across the workforce, using the wage basis and divisor your policy sets.
It values the balance as it stands today. It is not an actuarial valuation: it does not project salary growth, discount future payments or estimate how much leave will actually be encashed rather than taken.
Enter your figures, then press Calculate
Your 5 inputs become a full breakdown, with every step of the working shown beneath the headline figures.
The accrued balance multiplied by a daily wage. Two policy choices, the wage basis and the divisor, decide the daily wage, so the method sets those out before the multiplication.
Leave liability = Employees × Average unused leave days × (Monthly wage ÷ Divisor)
Include only leave that the policy lets employees carry forward or encash. Leave that lapses at year-end is not a liability.
Encashment is usually paid on basic (and DA) or on gross, as the leave policy or standing orders state. Value the balance on the same basis you would pay it.
Divide the monthly wage by 26 or 30, matching the divisor your policy uses for encashment, to get a daily wage.
Multiply the daily wage by average unused days and by the number of employees. For more accuracy, run it by grade or salary band and add the results.
What this does not include
Asked often enough about this calculation to be worth answering beside it.
It is the value of earned leave that employees have accrued and can carry forward or encash, which the organisation may have to pay in future. Valuing it lets finance provide for it rather than meet it unexpectedly.
Use the basis on which your policy pays encashment. Many policies use basic (and DA); some use gross. The calculator lets you choose either.
Not necessarily. This is a straightforward current-value estimate. Accounting standards may call for an actuarial valuation of leave benefits. Your auditor or actuary decides whether that is needed and how it is done.
No. Leave that lapses unused at the end of the year without encashment is not an amount the organisation will pay, so leave it out of the average.
Leave encashment works out one employee's payout. Leave liability values the whole organisation's accrued balance at once.
A calculator applies a rule to figures you type in. A payroll run applies it to your actual employee record, your locations and your verified declarations, which is where Professional Tax, LWF and TDS also resolve.
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