Expense Management

Managing leave encashment policies

Leave encashment allows employees to surrender their unused paid leave and get a fixed monetary compensation in lieu of each leave encashed. Keka allows you to define and assign leave encashment policies to each employee and define a rate for each leave that is being encashed. 


Let us take a look at how you can configure leave encashment policies and how you can define the formula to calculate the value for leave when it is being encashed. 


To define leave encashment policies, navigate to Payroll (1) from the left pane on the Keka HR portal. Select the Settings (2) tab and then go to the Leave Encashment (3) tab on this page. 



You can see the various leave encashment policies that's been configured for your organization here on the Leave Encashment Policies page.  To add a new encashment policy, click on Add Encashment Policy.



On the Add Encashment Policy page, add a Name for the encashment policy and also enter the formulate based on which the value is calculated to compensate the employee for each leave being encashed. 


You can enter a fixed value or use a formula to calculate this. You can base the formula off an existing component in the salary structure as well. Use the + Existing Salary Component link to select a salary component from the list of components that has been enabled. 



Once you have defined the formula, click Save.



On the Leave Encashment Policies page, you can now see the new encashment policy you've added. Add the various leave encashment policies you have by following the steps above. 


You can edit the existing policies, set a policy as default or delete a policy from the Leave Encashment Policies page. 


To edit a policy, click on the Edit icon next to the policy you want to edit. 



On the Edit Encashment Policy page, you can make changes to the name and the expression for the encashment policy as you wish. 


To set a policy as the default leave encashment policy for the organization, click on the three dots corresponding to the policy and from the drop-down, select Set as Default. 


To delete a particular policy, click on Delete Policy from the drop-down. In the confirmation window, select Delete.