Hi
I am reproducing below the bare provision uner Factories Act in India. Similar provisions are there in many of the Shops and Establishments Acts as well
Factories Act
Section 79(3)
If a worker is discharged or dismissed from service or quits his employment or is superannuated or dies while in service, during the course of the calendar year, he or his heir or nominee, as the case may be, shall be entitled to wages in lieu of the quantum of leave to which he was entitled immediately before his discharge, dismissal, quitting of employment, superannuation or death, calculated at the rates specified in sub-section (1), even if he had not worked for the entire period specified in sub-section(1) or sub-section (2) making him eligible to avail of such leave, and such payment shall be made -
(i) where the worker is discharged or dismissed or quits employments before the expiry of the second working day from the date of such discharge, dismissal or quitting; and
(ii) where the worker is superannuated or dies while in service, before the expiry of two months from the date of such superannuation or death.
This does not require elaborate explanation.
An employee earns leave, applies leave and enjoys leave. Very rarely we come across with alloting annual leave. There may be an understnading of when one person goes on leave.
See the observation of The Madras High Court in a recent judgement
"
Employees usually did not exhaust their earned leave; they chose to encash them at the time of retirement, or the sum was paid to their heirs in case of contingency such as the death of an employee. "
In India, if an emplooyee has earned leave and if he does not avail, then the same has to be encashed.
However, there is a limit prescribed in the Act.
79(5) a worker does not in anyone calendar year take the whole of the leave allowed to him under sub-section (I) or sub-section (2), as the case may be, any leave not taken by him shall be added to the leave to be allowed to him in the succeeding calendar year:
Provided that the total number of days of leave that may be carried forward to a succeeding year shall not exceed thirty in the case of an adult, or forty in the case of a child:
Provided further that a worker, who has applied for leave with wages but has not been given such leave in accordance with any scheme laid down in sub-sections (
and (9) 1[or in contravention of sub-section (10)] shall be entitled to carry forward the 2[leave refused] without any limit.
So, legally, there is a restriction.Some organisation allow 90 days and some even allow 120 days leave to be carried over!!
I hope I have answered your query >
Siva
India Labour Law 
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