Define leave encashment policy to make payment of outstanding leave balance automatically.
To setup leave encashment policy, go to Setup > Attendance > Leave Types and click on 'Encashment Rules' tab.
To enable encashment, select a leave from the dropdown and check 'Encash Leaves'
As shown above, we have configured encashment policy as follows:
"Encash balance of leaves above 0, in the month of DEC."
This means that entire balance of leave in an employee's account will be encashed in the month of December.
If you wish to encash only balance above a certain limit for e.g. 10, you can enter '10' in the box shown above. In such a case, if an employee has accumulated 15 leaves, 10 leaves will be encashed and 5 will be left out.
As you see in above example, we have selected 'Basic Salary' in encashment components. This means that only salary defined as 'Basic Salary' will be paid on encashment. If you wish to pay full salary on encashment, select all the components.