Leave Encashment in Frappe HR: Paying Out Unused Leaves
Leave Encashment is the process of paying an employee for their unused leaves instead of carrying them forward or letting them lapse. Where a leave type allows it, the leaves an employee hasn’t taken can be converted into a cash amount and paid out through their salary.
You will find it under Home > Human Resources > Leaves > Leave Encashment.
BEFORE YOU START
Set these up first: a Leave Type with Allow Encashment enabled (along with its Encashment Threshold Days, Earning Component, and Maximum Encashable Leaves), an Employee with a Leave Allocation and balance for that type, and the relevant Leave Period.
How to create a Leave Encashment
- Open the Leave Encashment list and click New.
- Select the Employee.
- Select the Leave Period and the encashable Leave Type.
- Frappe HR fetches the leave balance, the encashable leaves, and the encashment amount automatically based on the leave type’s settings and the employee’s salary.
- Set the Encashment Date.
- Save, then Submit.
How the encashable amount is worked out
Only the leaves above the Encashment Threshold Days set on the leave type can be encashed, and never more than the Maximum Encashable Leaves. The payout value is calculated from the Earning Component defined on the leave type together with the employee’s salary, so the amount reflects their actual pay rate.
NOTE
On submission, the encashment typically creates an Additional Salary entry using the leave type’s earning component, so the amount is paid out in the employee’s next salary slip. The encashed leaves are also deducted from their balance via the leave ledger.
TIP
Configure the leave type’s encashment settings threshold, earning component, and maximum carefully before you run any encashment. Those values drive both how many leaves qualify and the amount paid, so getting them right means the calculation just works each time.
Related Topics
- Leave Type
- Leave Allocation
- Leave Period
- Salary Component
- Additional Salary
SUMMARY
Leave Encashment pays an employee for unused leaves on a leave type that allows encashment. With the encashment settings configured on the leave type and a balance allocated, create an encashment by selecting the employee, leave period, and leave type Frappe HR fetches the balance, encashable leaves, and amount then set the date and submit. Only leaves above the threshold (up to the maximum) qualify, the amount is based on the earning component and salary, and submission creates an Additional Salary so it’s paid in the next salary slip.
