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Leave Encashment Calculator
Use this free leave encashment calculator to work out the payout for your unused leave days. Enter your salary, how many leave days you have left, the maximum number of days your employer will pay for, and the tax rate on the payout — it shows your gross encashment, the tax deducted, and the net amount you take home.
Daily rate = monthly salary ÷ 30, or annual salary ÷ 365.
Only days up to this cap are paid.
Enter 0 if the payout is not taxed.
| Daily salary rate | |
| Unused leave days | |
| Maximum encashable days | |
| Payable days | |
| Gross encashment | |
| Tax deducted | |
| Net payout |
Where your payout goes
Net payout Tax deducted
The bar updates as you type: the dark blue part is what you take home, and the light blue part is the tax on the payout.
How it works
Most jobs give you a set number of paid leave days each year. When the year ends, or when you leave the job, some of those days may still be unused. Leave encashment turns those unused days into money: the employer pays you for each day you earned but did not take, at your daily salary rate. It is sometimes called an unused leave payout, and it is a common part of a final settlement when an employee resigns or retires.
The first step is working out your daily salary rate, because everything else follows from it. This calculator uses a simple calendar basis that is easy to check: divide your monthly salary by 30, or your annual salary by 365 if you enter an annual figure. A monthly salary of $4,500 therefore gives a daily rate of $4,500 ÷ 30 = $150. That basis is stated on the tool so you can compare it with your employer's method. Some employers divide by working days instead — roughly 22 working days in a month, or 260 working days in a year — which gives a higher daily rate, so if your payslip shows a different daily figure, that is usually why.
Next comes the number of payable days. That is the smaller of two numbers: the leave days you have left, and the maximum number of days your employer allows to be encashed. The cap matters because many employers limit encashment — 15 or 30 days is common — even if you have more days banked. If you have 12 unused days and a cap of 15, all 12 are payable. If you have 20 unused days and a cap of 15, only 15 are paid and the other 5 are lost. The calculator takes the minimum of the two automatically.
Gross encashment is then payable days multiplied by the daily rate. From that gross figure, tax is deducted at the rate you enter — 10% by default, and 0 if the payout is not taxed in your case. What is left after tax is your net payout, the amount that actually reaches you. Tax treatment varies by country and by whether the payout is made during employment or on retirement, so the editable rate lets you match your own situation rather than assuming one rule for everyone.
Payable days = Smaller of unused days and maximum encashable days
Gross encashment = Payable days × Daily rate
Tax deducted = Gross encashment × Tax rate %
Net payout = Gross encashment − Tax deducted
Before you rely on a figure, check three things with your employer. First, how many leave days you actually have left — your HR portal or latest payslip should show the balance, and the balance often excludes days that have already expired. Second, the cap in your leave policy and whether it changes when you retire or resign. Third, how your employer works out the daily rate and how the payout is taxed, because those two choices move the final number more than anything else. A payout made on retirement is sometimes taxed differently from one made during employment, so ask HR or your tax adviser if you are unsure.
Worked example
Take an employee with a monthly salary of $4,500, 12 unused leave days, a maximum of 15 encashable days, and a tax rate of 10% on the payout. Select monthly salary, enter $4,500, enter 12 unused days, enter a cap of 15, and enter 10% tax. The calculator works like this.
Step 1: Work out the daily rate. $4,500 ÷ 30 = $150 per day.
Step 2: Work out the payable days. The smaller of 12 unused days and a cap of 15 is 12 days.
Step 3: Work out the gross encashment. 12 days × $150 = $1,800.
Step 4: Work out the tax. $1,800 × 10% = $180 deducted.
Step 5: Work out the net payout. $1,800 − $180 = $1,620.
The tool shows the same result: a gross encashment of $1,800, tax deducted of $180, and a net payout of $1,620. The chart beside the tool shows the same split — a dark blue bar for the $1,620 you take home and a light blue slice for the $180 of tax.
If the same employee had 20 unused days instead of 12, the cap would bite: payable days would be 15, gross would be 15 × $150 = $2,250, tax would be $225, and the net payout would be $2,025. The extra 5 days would not be paid. And if the tax rate were 0%, the net payout in the main example would simply be the full $1,800.
FAQ
What is leave encashment?
Leave encashment is a payment an employer makes for leave days an employee earned but did not take. Instead of the days being lost, each unused day is paid out at the employee's daily salary rate. It usually happens when an employee leaves a job, retires, or reaches the end of a leave year, and only up to the number of days the employer's policy allows to be encashed.
How is the daily rate calculated?
The daily rate is your monthly salary divided by 30, or your annual salary divided by 365 if you enter an annual salary. This calculator uses monthly salary divided by 30 as its basis, so a monthly salary of $4,500 gives a daily rate of $150. Some employers use working days instead of calendar days, which gives a slightly higher daily rate, so check your employer's policy if the figure looks different from your payslip.
Is the leave encashment payout taxed?
In most cases, yes. A leave encashment payout is usually treated as part of your income and taxed at your normal rate, so the amount you receive in hand is less than the gross payout. This calculator lets you enter the tax rate that applies to the payout, with 10% as the default, and shows the tax deducted and the net payout separately.
What if my unused days exceed the cap?
Only the days up to the cap are paid. If you have 20 unused days and your employer allows a maximum of 15 encashable days, the payout is based on 15 days and the other 5 days are not paid. This calculator takes the smaller of your unused days and the cap as the payable days, so enter the cap from your employer's leave policy.
Does every employer offer leave encashment?
No. Leave encashment depends on the employer's leave policy and on local labour law. Some employers pay for unused leave when an employee leaves, some let days carry forward into the next year instead, and some simply let unused days lapse. Check your employment contract or your HR department to find out whether your unused leave can be encashed and how many days are allowed.