What is the Rate of Leave Encashment in Lieu of LPR?

Many employees asked me an important question that what is the Rate of Leave Encashment in Lieu of LPR? Finance Division and Finance Department Government have already clarified the same.

There are some employees who asked me the exact position of the same issue. As many of the employees said that Leave Encashment they have heard is of the pay that they dawn during the leave encashment period. But the reality is not the same.


Question by the Visitors “What is the Rate of Leave Encashment in Lieu of LPR?”


To clarify the situation, we can say that an employee retired on 15-12-2017 and he has one year’s leave encashment starting from 15-12-2016 to 14-12-2017. Suppose on 15-12-2016 his pay was 16000/-. On the revision of basic pay scales, 2017 his pay was fixed on 20000/- and after getting annual increment his pay was fixed as 21500/-. In this example their question was as he got different rates of Basic Pay during this period of encashment, so what would be the encashment of leave?


The answer to their question is simple:


They will get the leave encashment as per their Last Pay Certificate Basic Pay.


In the above example to calculate the leave encashment amount his pay in December 2017 after getting annual increment i.e 21500/- will be counted for the encashment.


How to Calculate the Encashment Amount?


In the above example, the last pay drawn of the employee as per LPC is 21500/-. The employee has 365 days leave in his credit, so the amount of encashment will be as under:


21500 x 12 = 258,000/-



If the employee has more than 365 days leave in his credit as per Leave Account, then we shall consider only 365 days leaves. The leaves beyond 365 are of no use.  However, if the employee has leaves less than 365 days he will get leave encashment of the leaves that he has on his credit. But we will calculate the leave encashment as per the basic pay mentioned in his Last Pay Certificate (LPC).


Supporting Documents


To support all the above examples I am uploading here the following Notifications:


Finance Division Notification of the dated 29-08-2012 Parra 6 of IV


Finance Department Punjab Notification of the dated 09-09-2013 para 6-C


These notifications clearly say that “Leave pay for the purpose of encashment of LPR shall be computed on the basis of pay and allowances reckonable towards pension as per last pay certificate of a civil servant.”


Any amendment/clarification/suggestion from the visitor’s point of view will be welcomed here for the guidance of the employees.



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2 thoughts on “What is the Rate of Leave Encashment in Lieu of LPR?

  1. Dear!
    An employee will get an encashment for 365 days not for 12 months.
    As per your calculation an employee will get 21500×12=258000
    While the order is for 365 days not for 12 months the calculation will be as under:


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