Leave Encashment Calculator (Pakistan)
Updated November 2026 · Free · No sign-up
Calculate leave encashment in Pakistan — the private-sector annual-leave payout (14 days/year accrual under the Factories/Shops laws) and the government LPR (leave preparatory to retirement) encashment tradition.
Quick answer: Private sector: unused annual leave (14 consecutive days/year factories standard, accumulating per provincial caps) encashes at exit at the current wage. Government: LPR encashment of up to 365 days at last pay is the retirement classic.
The Frameworks
| Factories Act leave | 14 consecutive days after 12 months’ service; unused accumulates (caps ~ 28 days provincially) |
| Shops & Establishments | Similar annual leave by province (Sindh richer post-2015) |
| Encashment trigger | Exit (resignation/termination/retirement) — in-service encashment per policy |
| Government LPR | Opt for leave OR encash up to 365 days at last-drawn pay — the pension-file staple |
Worked Examples
Example 1 — private exit. Rs 80,000/month, 28 banked days, ÷30: Rs 74,667 in the settlement.
Example 2 — LPR encashment. Grade-17 officer, last pay Rs 180,000, 365 days: Rs 2.19M (÷30 convention) — why LPR elections dominate retirement planning conversations.
Example 3 — the cap burn. Accrual beyond the provincial cap lapses — banked days above 28 (where capped) evaporate; take or encash before the ceiling.
Tax and Documentation
Government LPR encashment: exempt. Private encashment: taxable as salary (averaging relief where lumped) — confirm payroll’s treatment. Evidence: the leave register/balance certificate at exit; disputes ride the final-settlement claim with gratuity.
Frequently Asked Questions
How is leave encashment calculated in Pakistan?
Unused days × (monthly gross ÷ 30 or 26 per policy) at the current/last-drawn wage — payable with the final settlement.
How much annual leave do Pakistani workers get?
14 consecutive days after each 12 months (Factories Act standard; provincial Shops Acts similar) — accumulating to caps around 28 days.
What is LPR?
Leave Preparatory to Retirement — government servants take up to a year’s leave before retiring OR encash up to 365 days at last pay; encashment is the common choice.
Is leave encashment taxable?
Government LPR encashment is exempt; private-sector encashment taxes as salary (with averaging relief for lumps).
Do unused days above the cap survive?
No — accumulation ceilings lapse the excess; encash or take leave before hitting the provincial cap.
✓ Formula verified • Last updated: November 3, 2026