Leave Encashment & Notice Pay Calculator (India)
Estimate unused leave payout and notice-period buyout for your final settlement.
What is it?
This tool covers two common parts of a full-and-final salary settlement: cashing out unused earned leave, and calculating notice pay owed when an employee or employer buys out a shortfall in the notice period.
Formula Explanation
Leave Encashment: daily wage rate (monthly Basic + DA ÷ 30) × number of unused leave days. Notice Pay: daily wage rate × the number of notice-period days not actually served, whether by the employee buying out the shortfall or the employer paying it in lieu of notice.
Example Calculation
An employee with ₹45,000 Basic+DA encashing 15 unused leave days receives (₹45,000 ÷ 30) × 15 = ₹22,500. Separately, if their 30-day notice period is cut short by 20 days served, notice pay owed is (₹60,000 ÷ 30) × 10 = ₹20,000.
How to Use
- Switch between the Leave Encashment and Notice Pay tabs depending on what you're calculating.
- For leave encashment, enter your Basic + DA and the number of unused leave days.
- For notice pay, enter your monthly salary, the notice period, and how many days you actually served.
- Review the calculated payout for each.
Benefits
- Covers two related full-and-final settlement calculations in one tool.
- Uses the standard 30-day monthly divisor convention for daily rate calculations.
- Helps you sanity-check your final settlement statement from HR.
Use Cases
- Estimating your final payout before resigning or being relieved from a job.
- Checking whether an employer's notice pay deduction matches the expected calculation.
- HR teams quickly calculating leave encashment or notice buyout amounts for departing employees.
What Your Result Means
Leave encashment is money owed to you for earned leave you didn't use. Notice pay is either money you owe your employer (if you leave early without serving full notice) or money your employer owes you (if they end your employment without full notice) — check your employment contract to see which direction applies.
Tips
- Check your company's leave policy — some cap the number of leave days eligible for encashment.
- Notice pay is typically calculated on gross salary, while leave encashment often uses only Basic + DA — confirm which your employer uses.
- Government employees generally get full tax exemption on leave encashment; private-sector rules differ and have exemption limits.
Common Mistakes
- Using gross salary instead of Basic + DA for leave encashment when your company policy specifies otherwise.
- Forgetting that notice pay can apply in either direction — employee-owed or employer-owed — depending on who ends the contract early.
- Assuming leave encashment is always tax-free — private-sector exemption is capped, unlike for government employees.
FAQs
Is leave encashment taxable?
For government employees it's typically fully exempt; for private-sector employees it's exempt up to a statutory cap, with any excess taxable as salary income.
Who pays notice pay — the employee or employer?
It depends on who ends the employment early. If an employee leaves without serving full notice, they typically pay the employer; if the employer terminates without full notice, they typically pay the employee.
Can my employer refuse to pay unused leave encashment?
This depends on your employment contract and local labor law — many companies pay out unused earned leave at resignation or retirement, but policies vary, so check your contract.
These are general estimates — actual full-and-final settlement calculations depend on your specific employment contract and company policy.
Last updated: July 26, 2026