Leave Encashmentबिदा सटही
Leave encashment is the conversion of an unused leave balance into money. In Nepal it applies to home leave that has accumulated beyond the ninety-day ceiling, and to the remaining balance when an employee leaves.
Also called: leave payout, bida satahi, encashment of leave Nepal
Key facts
- Applies to
- Home leaveSick leave is normally not encashable.
- Trigger
- 90-day ceiling or exitWhichever comes first.
- Taxable
- YesIt is income in the period it is paid.
The two moments it happens
- When accumulated home leave passes the ninety-day ceiling. The excess is encashed rather than being lost or continuing to build.
- When an employee leaves. The remaining encashable balance is settled in the full and final settlement.
The liability nobody books
An accumulated leave balance is a real obligation. It is paid eventually, either as leave taken or as cash, and a company that has never quantified it is carrying an unrecorded cost.
The number is easy to produce once balances are accurate: days accrued, less days taken, per employee, valued at their current salary. It is the accuracy of the balances, not the arithmetic, that is usually the problem.
What is normally not encashable
Sick leave, mourning leave, maternity and paternity leave are purpose-specific entitlements rather than earned balances, so they are normally not encashed. The company policy should say so explicitly instead of leaving employees to assume otherwise at exit.
Leave Encashment, answered
For home leave accumulated beyond the ninety-day ceiling, and for the remaining balance when an employee leaves, encashment is how the entitlement is discharged. Purpose-specific leave such as sick or mourning leave is normally not encashable.
Days accrued less days taken, valued at the employee's applicable remuneration. It is taxable income in the period it is paid.
- Labour Act 2074, provisions on home leave accumulation and encashment.
This page explains general practice in Nepal. It is not legal or tax advice, and statutory figures are revised from time to time. Check the current Act, rule or notice before acting on it.
Related terms
- Home Leaveघर बिदाHome leave is Nepal's annual paid leave entitlement. Under the Labour Act 2074 an employee earns one day of home leave for every twenty days worked, and unused days accumulate up to a ceiling of ninety.
- Full and Final Settlementअन्तिम हिसाबFull and final settlement is the closing calculation when an employee leaves: salary for days worked, leave encashment, any dues owed to them, less any recoveries, paid once every clearance is complete.
- Sick Leaveबिरामी बिदाSick leave is paid leave for illness. Under Nepal's Labour Act 2074 an employee is entitled to twelve days a year at full remuneration, and unused days accumulate up to forty-five.
- Offboardingबहिर्गमन प्रक्रियाOffboarding is the process of ending employment properly: handover, asset recovery, access revocation, clearance from each department, the exit conversation, and the final settlement.
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