Employee rights are important in an organization. Your employee benefits possess the power to determine if the company can grow positively. One of the most important employee entitlements in a business is the leave benefits. It includes the allocation of leave salary or leave encashment.
This article sheds light on the leave salary calculation in Bahrain from an employee and employer perspective. It helps you understand the sample calculations, different leave encashment processes, types, etc.
You can learn more about leave encashment models using authentic calculations. Hop in to discover the role of digital software in accommodating the leave salary services of your employees.
Overview of Leave Salary Calculation in Bahrain
The concept of leave salary calculation is a crucial one from an HR perspective. When you cover the leave salary of employees, it is important to calculate and credit the accurate amount. Annual leave salary calculation in Bahrain takes care of these steps for companies in the region.
The idea of leave salary applies to specific types of employee leaves in an organization. These include important considerations in leave compensation management. The general types of leave under consideration are paid leaves, sick leaves, and privileged leaves.
The calculation of leave salary applies to all Bahrain-based companies and their employees in different profiles. If you are a Bahrain business, it is mandatory to comply with leave salary considerations of employees.
What is Leave Salary or Encashment?
The term for leave salary in the Bahrain region is leave encashment. It is the process of calculating and crediting an amount to the employee account based on their leave entitlements.
Leave encashment covers the unused paid leaves of an employee. You can consider it for a year. Annual leave salary calculations make it easier to credibly manage the final amount. It may also be part of the full and final settlement of your employees.
One of the vital factors about leave encashment is the timing of its calculation. You may use the closing of the financial year or the employee resignation time to calculate leave encashment. The best part about leave encashment is the flexibility in calculation models based on the organization.
The technique of leave encashment may include the carry forward option of leaves before the amount credit step. It is available as part of the employee engagement process. Digital payroll solutions carry out the leave salary calculation with ease.
How Can You Calculate Leave Encashment in Bahrain?
Wondering how the leave salary is calculated in Bahrain? The calculation of leave encashment in Bahrain refers to the major aspects associated with employee payroll processing. We can explain the simple calculation process using the below steps:
Understanding the Process
The first step is to understand the whole leave encashment process from your and your employee’s perspectives. Once you get a picture, the rest of the steps are simple to carry out efficiently.
Leave salary Calculation Formula
The leave salary or encashment formula is as follows:
Leave encashment of an employee = Gross salary/30 * leave days.
Gross salary represents the total salary of the employee. It includes the basic pay plus various allowances and bonus incentives of the employee. Leave days represent the number of earned paid leaves of the employee in a calendar year.
Implementing the Process
The next step is to implement the leave encashment calculation process. You should focus on delivering a process that is employee-friendly, cost-effective, and timely.
Actual Leave Encashment Calculation
The next step in the process is the actual calculation of the leave encashment of your employees. Each employee’s payment allowance is under calculation referencing the employee leave calendar and the defined formula.
Crediting the Amount
After proper evaluation of leave encashment contribution to an employee, the next step is to credit the amount. It follows a strategic approval process and technical formalities.
Feedback and Support
As a final measure, you have to wait for feedback from your employees. Feedback is for the amount they have in their accounts and their calculation missteps.
Employee support should also be possible for further steps after the leave encashment calculation.
Process & Types of Leave Encashment
The leave encashment process is all about the conversion of an employee’s unpaid leaves to finite monetary benefits. It is part of the compensation management of your resources.
To fully summarize how to calculate leave salary in Bahrain, learn about the process first. The leave salary process displays the following steps:
Check and Confirm Eligibility
The primary step is to check and confirm the eligibility criteria of an employee’s leave encashment. It helps you observe the amount of leaves in an employee’s annual leave calendar.
You can check the particular employee’s paid leaves with a carry forward or encashment option. Based on this analysis, you can confirm whether the employee is eligible for a leave salary entitlement.
Initiate and Process Request
On confirmation of your employee’s leave salary entitlement, the next step is to initiate a request with the governing body. It helps you process the request according to the existing conditions.
The initiation and processing of requests follow certain formalities and procedures. Submission of written requests and inclusion of HR personnel are a must in the whole process. Digital portals can help your case with request form submissions.
Calculation and Approval from the Authorities
Once the request is under process, a systematic calculation of leave encashment takes place. Defined formulas and calculation techniques conduct the process. After calculating the amount as part of the leave encashment calculation, you can submit it to the upper management.
The approval process is a simple step but involves an essential route for establishing a formal procedure. Since authorities are part of the process, you need to verify the format before final submission and approval.
Evaluation and Payment of Leave Encashment
The final step is the evaluation of leave encashment of employees. Include a direct step from approval to evaluation and feedback. Follow it up with the processing of payments to the employee account.
It may be a one-time payment at the end of the annual leave calendar or the end of the employee’s tenure. Monetary compensation and payment include special tax deductions and compliance norms.
The types of leave encashment depend on the different leaves in an organization. It relies on the leaves that apply to the employee in question. The different types of leave salary calculation are easy to summarize from the leave types in your company. Some of these include:
Paid Casual Leaves
Casual leaves are the most common leave types in an organization. A company allows a fixed quota of paid casual leaves in an annual leave calendar. Employees can use this as per the requirement by submitting a request to the HR department. In case of avoiding the leaves, you can go for the carry forward option to the next leave calendar or opt for leave encashment.
Sick or Medical Leaves
Sick leaves are necessary for employees to fulfill medical requirements and necessities. Fixed quotas are available for sick leaves in an annual leave calendar. Unlike casual leaves, companies mostly avoid carry-forward options for sick leaves. You can still receive the leave encashment for an unused medical leave.
Privilege Leaves
Privilege leaves are special leaves that the company grants to its employees. You can provide this as a fixed quota in an annual year with minimum compulsory demands. Privilege leaves may also get leave encashment depending on the employee’s choice.
Holidays
Different holidays in a leave calendar year are in consideration in this segment. You can include national holidays and special holidays in this format. If your employees didn’t take a leave on any of these days, they can use the encashment option.
Compensatory Leaves
Generally referred to as comp-offs, these are leaves in a company to compensate the employee work on fixed off days. If they are not using the comp off, then you have to pay them a leave salary for the same.
Maternity Leaves
These are special leaves that female employees need relating to pregnancy or childbirth conditions. Paternity leaves and parental leaves are also part of this category. Some companies provide a fixed quota of maternity leave and are eligible for leave encashment.
Reimbursement Leaves
The eligibility of these leaves varies according to company policies regarding its employees. The leave is for employee upskilling or for taking a sabbatical from work. You can encash this leave by requesting the HR team as per the company policy.
Marriage Leaves
You may get an option of leave encashment for your marriage dates. These may be fixed or personalized depending on the HR terms and conditions. Most companies do not provide support for a long period for this leave type.
Unpaid Leaves
Unpaid leave does not warrant a leave encashment for employees. However, these leave types may be mixed with regular paid leaves depending on employee, company, and HR division scenarios. In case of conversion to a paid leave, encashments may apply.
The Role of Artify 360 HR Software to Carry Out Leave Encashment Calculation Bahrain
For leave salary calculation in Bahrain, the most important factor is an automated digital technology platform. It adds further value to the employee engagement process of your organization.
Among the digital technology practices, a preferable solution is the implementation of cloud HR software. We are talking about the services of Artify 360 HR Software. Artify’s payroll modules help you determine the leave encashment calculation feasibly.
If you are a Bahrain-based business, you can bank on the services of the Artify HR software system. It is a proven product with brilliant client testimonials about leave encashment calculation and other payroll functions.
For more info regarding the workflow of Artify HR payroll software in leave salary calculation, contact us. We have an expert, in-house team who can contribute value to your queries and questions.
