To support such policies, greytHR now allows configuration of leave encashment limits either as a fixed number of days or a percentage of available leave balance, with optional rounding logic.

Encashment of unused leave

Encashment of unused leave in greytHR allows employees to convert a portion of their unused leave balance into monetary compensation, instead of taking those days off. This provides employees with added financial flexibility while ensuring that their earned leaves are not wasted.

Enable the unused leave encashment configuration

Leave encashment helps employees monetize their unused leave, providing them with added financial benefits.

To enable unused leave encashment for employees in greytHR, from your Admin portal, go to Settings > System Settings > Leave > Leave Rules.

Select a leave type and click the Edit icon. From the drop-down, select the Leave encashment option.
Choose Yes for Can this leave type be encashed?
Fill in the other details as needed.
In the Calculate the encashment limit as per option, select Days or Percentage to calculate the maximum number of days that can be encashed.

Note: You can select either of the two options while configuring the encashment rule.

Choose the preferred option based on your organisation's leave encashment policy.

Configure leave encashment in days

To configure the leave encashment in days for employees, select Days from the Calculate the encashment limit as per option, and fill in the details such as the Maximum days that can be encashed in a year.

Note: You can also define the number of times an employee can apply for a leave encashment request in a year.

Configure leave encashment in percentage

greytHR introduces a new percentage-based rule, allowing you to define the percentage or share of the total leave balance that employees can encash.

To configure the leave encashment in percentage for employees, select Percentage from the Calculate the encashment limit as per option, and fill in the required details.

Note: When leave encashment is configured as a percentage less than 100%, greytHR prompts you to select a round-off method to handle fractional leave days. This avoids decimal or fractional leave days during encashment.

For example, suppose an employee has 7 days of leave balance.

If your organisation allows 60% encashment of your available balance, the employee can encash 4.2 days of leave.

Since 4.2 is not a whole number, the system will apply the selected round-off rule:

If you select Round off to nearest full day, it will round to 4 days.
- Any value from 4.1 to 4.4 will become 4.
- Any value from 4.5 to 4.9 will become 5.
If you select Round off to ceiling full day, it will round up to 4 days.
- Any value from 4.1 to 4.9 will become 4.

Note: On the employee's ESS portal, if the leave encashment request exceeds the encashable balance, the system will throw an error.

Calculate the maximum number of leave days an employee can encash

The system dynamically calculates the maximum number of encashable leave days at the time of the employee’s request. This calculation is based on:

Employee’s total eligible leave balance for that year
The configured encashment percentage on the available leave balance
The selected round-off method.

Suppose an employee has 12 days of eligible leave balance for the year.

The company has configured 70% encashment.
The admin has selected round off to the nearest full day.

70% of 12 days = 8.4 days.
Since 8.4 is not a whole number, the system applies the round-off rule.
It rounds to 8 days based on the nearest full day.
So, the employee can encash 8 days of leave.

Download the leave policy

To download the leave policy, from your Admin portal, go to Settings > System Settings > Leave > Leave Rules.
Select a leave type and click the Download icon. The leave policy will be downloaded in a PDF file.

Leave encashment for unused leave balances: Frequently Asked Questions

What is leave encashment for unused leave?

Leave encashment allows employees to convert a portion of their unused leave balance into monetary compensation. Instead of taking time off, employees can receive a payout, offering financial flexibility without letting their earned leave go to waste.

How do I enable leave encashment in greytHR?

To enable this feature, go to Admin Portal > Settings > System Settings > Leave > Leave Rules.

Select the relevant leave type and click the Edit icon.
Select Can this leave type be encashed? to Yes.
Choose whether the encashment limit will be calculated in Days or Percentage.
Fill in the rest of the configuration based on your organization’s policy.

Can I control how many leave days can be encashed in a year for an employee?

Yes. You can either

Set a fixed number of days an employee can encash per year.
Or configure a percentage of the available leave balance that can be encashed.
Additionally, you can define how many times per year an employee is allowed to submit leave encashment requests.

How does the percentage-based encashment configuration work?

When the number of leaves that can be encashed is configured as a percentage:

You specify a percentage of the total leave balance that can be encashed (e.g., 66%).
If the result is a fractional day, greytHR will prompt you to select a rounding method.

Example:

Employee leave balance: 7 days
Encashment percentage: 66% → 4.6 days
The system applies rounding logic based on your configuration:
- Round off to nearest full day → 5 days
- Round off to ceiling full day → 4 days

What happens if an employee requests more leave encashment than allowed?

If an employee submits a request that exceeds the allowed limit (post rounding), the system will throw an error and prevent submission.

What does rounding off mean in leave encashment?

Rounding off is the process of adjusting fractional or decimal leave days to a more usable value, such as the nearest full day or the ceiling full day. This ensures that employees do not receive decimal leave values when encashing unused leave.

Why is rounding off needed during leave encashment?

When the encashment is calculated as a percentage of the leave balance, the result may not always be a whole number.

Example:

If an employee has 7 days of leave and the company allows 60% encashment, the result is 4.2 days.
Since 4.2 is not a whole number, rounding off helps convert it into an acceptable unit like 4 or 5 days, based on the rounding off configuration done.

Is rounding off applicable for both ‘days’ and ‘percentage’ configurations?

No. Rounding off is applicable only when encashment is configured using a percentage.
For fixed-day encashment, you can directly set the number of days, so rounding is not needed.

What rounding options are available for fractional encashment values?

You can choose from:

Round off to nearest full day
Round off to ceiling full day

These settings help ensure leave encashment requests do not result in decimals or invalid amounts.

Can we download the configured leave encashment policy?

Yes. To download the configured leave encashment policy, go to Admin Portal > Settings > System Settings > Leave > Leave Rules.

Select the leave type and click the Download icon.
The leave policy will be downloaded as a PDF file.

How does greytHR calculate how many leave days an employee can encash?

When an employee requests leave encashment, the system automatically calculates the maximum days they can encash using three things:

How many unused leave days the employee has
What percentage configured for encashment
How the system should round off any decimal (not whole) days

📌 Let’s understand with a simple example:

An employee has 12 days of unused leave.
The company allows to encash 70% of it.
- 70% of 12 = 8.4 days
But the employee can’t encash 8.4 days — it’s not a whole number!

So, the system applies the rounding rule set by the company.

If the rounding rule is nearest full day,8.4 gets rounded to 8 days. So, the employee can encash 8 days.

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