Leave Encashment
Overview
Leave Encashment — Business Overview
Leave Encashment is a business document used to formally record and process the conversion of unused employee leave into a monetary payment. It supports organizations that allow employees to receive cash for accrued leave days instead of taking time off, either during employment or at the time of separation.
This document ensures that leave payouts are handled in a structured, transparent, and policy-compliant manner within Dafater.
Purpose in Business Operations
Leave Encashment is used to: - Calculate the cash value of unused leave balances - Approve and document employee requests for leave payout - Ensure accurate and fair compensation aligned with company policy - Support payroll and financial planning with proper records of leave liabilities
It bridges the gap between leave management and employee compensation.
Prerequisites and Setup Requirements
Before using Leave Encashment, the following should be in place: - Employee records with defined employment terms - Clear company policies on leave eligibility and encashment rules - Approved leave types that are eligible for encashment - Accurate tracking of employee leave balances - Defined salary or wage structure to calculate payout value
These prerequisites ensure that leave encashment is calculated correctly and consistently.
Typical Workflow and Business Process Fit
Employee Request or Eligibility Trigger
An employee becomes eligible for leave encashment, either by request, annual policy, or upon resignation/retirement.Leave Balance Review
Available eligible leave days are reviewed against company policy.Encashment Calculation
The monetary value of the leave days is calculated based on the employee’s compensation terms.Approval Process
Managers or HR review and approve the Leave Encashment request.Payment Processing
The approved amount is processed through payroll or a separate payout, depending on company practice.Record Keeping
The transaction is recorded for audit, compliance, and reporting purposes.
This workflow ensures controlled and well-documented leave payouts.
Key Business Scenarios Where Leave Encashment Is Essential
Employee Exit or Retirement
Paying out unused leave balances as part of final settlement.Annual or Periodic Leave Payouts
Allowing employees to encash leave beyond a defined threshold.Policy-Driven Benefits
Using leave encashment as an employee benefit to improve satisfaction and retention.Financial Planning and Compliance
Accurately tracking leave liabilities and payouts for budgeting and audits.
Important Considerations for Users
- Always ensure leave eligibility aligns with company policy before processing.
- Verify leave balances to avoid overpayment or disputes.
- Be consistent in approvals to maintain fairness across employees.
- Coordinate timing with payroll to ensure smooth payment.
- Maintain proper documentation for audit and compliance purposes.
Leave Encashment plays a vital role in managing employee benefits responsibly, balancing operational needs with employee satisfaction, and maintaining clear financial records within Dafater.
Basic Information
- Module: HR
- Document Type: Other
Fields
| Field Name | Label | Type | Required | Options | Description |
|---|---|---|---|---|---|
| employee | Employee | Link | ✓ | Employee | Employee for whom leave encashment is processed. |
| employee_name | Employee Name | Data | - | Full name of the selected employee. | |
| department | Department | Link | Department | Department of the employee for reporting and accounting. | |
| company | Company | Link | ✓ | Company | Company under which the leave encashment is recorded. |
| leave_period | Leave Period | Link | ✓ | Leave Period | Leave period applicable for the encashment calculation. |
| leave_type | Leave Type | Link | ✓ | Leave Type | Type of leave eligible for encashment. |
| leave_allocation | Leave Allocation | Link | Leave Allocation | Related leave allocation record used for calculation. | |
| leave_balance | Leave Balance | Float | - | Remaining eligible leave balance at time of encashment. | |
| actualencashabledays | Actual Encashable Days | Float | - | System calculated days eligible for encashment. | |
| encashment_days | Encashment Days | Float | - | Number of leave days approved for encashment. | |
| encashment_amount | Encashment Amount | Currency | currency | Total monetary value payable for encashed leave days. | |
| payviapayment_entry | Pay Via Payment Entry | Check | - | Indicates if payment is made through Dafater payment entry. | |
| expense_account | Expense Account | Link | Account | Expense account to record leave encashment cost. | |
| payable_account | Payable Account | Link | Account | Liability account used to pay encashment amount. | |
| posting_date | Posting Date | Date | - | Accounting date for posting encashment entries. | |
| currency | Currency | Link | ✓ | Currency | Currency used for encashment amount and payment. |
| paid_amount | Paid Amount | Currency | - | Amount already paid against this encashment. | |
| cost_center | Cost Center | Link | Cost Center | Cost center charged for the encashment expense. | |
| encashment_date | Encashment Date | Date | - | Date on which leave encashment is effective. | |
| additional_salary | Additional Salary | Link | Additional Salary | Linked additional salary record created for encashment. | |
| amended_from | Amended From | Link | Leave Encashment | Original leave encashment record being amended. | |
| status | Status | Select | Draft, Unpaid, Paid, Submitted, Cancelled | Current processing and payment status of encashment. |
Permissions
| Role | Read | Write | Create | Delete | Submit | Cancel |
|---|---|---|---|---|---|---|
| HR User | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ |
| Employee | ✓ | ✓ | ✓ | ✓ | ||
| HR Manager | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ |
| System Manager | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ |
Related DocTypes
| DocType | Relationship | Module |
|---|---|---|
| Account | Links to | Accounts |
| Additional Salary | Links to | Payroll |
| Company | Links to | Setup |
| Cost Center | Links to | Accounts |
| Currency | Links to | Geo |
| Department | Links to | Setup |
| Employee | Links to | Setup |
| Leave Allocation | Links to | HR |
| Leave Encashment | Links to | HR |
| Leave Period | Links to | HR |
| Leave Type | Links to | HR |