Free letter template · Word
A leave encashment approval letter confirms to the employee how many days of leave will be encashed, the salary basis and amount, tax deduction and the payment date. It closes the loop on the employee's request and reduces the leave balance on record.
APPROVAL OF LEAVE ENCASHMENT
To,
[Employee Name]
[Designation], [Department]
Employee ID: [Employee ID]
Dear [Employee Name],
We are pleased to inform you that your request for encashment of earned leave has been approved as below:
| Particulars | Details |
|---|---|
| Leave balance as on [DD/MM/YYYY] | [Number] days |
| Days requested | [Number] |
| Days approved | [Number] |
| Calculation basis | [Basic Salary + DA] ÷ [Number] days |
| Per-day amount | ₹[Amount] |
| Gross encashment amount | ₹[Amount] |
| Tax deducted at source | ₹[Amount] |
| Net amount payable | ₹[Amount] |
| Payment with | [Salary for Month, Year / Full and Final Settlement] |
| Revised leave balance | [Number] days |
[The approved days are lower than requested because the leave policy permits encashment of up to Number days in a year / requires a minimum balance of Number days to be retained.]
Tax has been computed as per applicable income-tax rules on the information available. For any query on the calculation, please contact [HR Name] at [Email Address].
Regards,
Copy to: Payroll | Personnel File
This template is a starting point only. Review it against applicable labour laws, the relevant state Shops & Establishments or Factories rules, the Labour Codes and their rules as notified, your standing orders and leave policy, and take legal advice where needed.
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Typically, per-day salary on the basis defined in policy (such as basic or basic plus DA divided by a fixed number of days) multiplied by the number of days encashed.
During service, usually with the next salary or in an annual cycle. At exit, it is paid as part of the full and final settlement.
Policy limits such as a maximum encashable number of days or a minimum balance to be retained can reduce the approved days. The letter should state the reason.