Encashment Payment Procedure

The Leave Encashment feature in PrismERP allows employees to monetize their unused and eligible carry-forward leaves. It provides organizations with a systematic method to calculate, restrict, and process leave encashment either during service or at the time of separation. The feature is configurable based on policy, allowing customization on the number of encashment applications, salary base calculation, percentage of carry-forward leaves to be encashed, and the divisor for daily rate computation.

Key Features

• Encashment Application Limit Set how many times an employee can apply for encashment in a service year (e.g., 1, 2, or 3 times)

• Calculation Base Choose whether the encashment will be calculated on Gross salary or Basic salary.

• Encashment Percentage Configuration Define the % of eligible carry-forward leave balance that can be encashed (e.g., 50%, 100%).

• Calculation Divisor

  • Fixed 30 Days
  • Actual Days in a Month: Used to calculate per-day encashment value.

• Leave Type Linking Can be linked only with eligible leave types (e.g., Earned Leave or Leave & Encashment types)

• Payment Integration Automatically calculates and includes encashment during payroll run or as one-time payment

How to Use This Feature in PrismERP

Configuration Steps:

Application Limit

• Define how many times per year an employee can apply for encashment (e.g., 1, 2, or 3)

Calculation On

• Choose salary component for encashment:
  • Gross Salary
  • Basic Salary

% of Encashable Carry Forward Leave

• Enter the percentage of carry-forward leave eligible for encashment
• Example: 100% of carry-forward balance, or only 50%

Calculation Divisor

• Choose method to compute daily salary rate:
  • 30 Days: Fixed divisor for all months
  • Days in Month: Variable based on calendar month

Integration with Payroll

• System auto-calculates eligible encashment during salary generation or manual process