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Hi All,
In our organization, employees have accumulated 40 -50 PL's.
Now they are asking for encashment. Our HR Policy is also not clear on this.
From India, Chandigarh
Hi Hi dear this is varied from organizatin to organization.You just check the previous Records of your organizaton and see how they managed to give. Regards SHYAM
From India, Mumbai
First you have to frame HR policy for PL encashment, there is no statutory proceedure in leave encashment. Do as your management wish.
From India, Hyderabad
Dear Vineet,
You have not mentioned the name of the Act under which your unit is covered i.e Punjab Shops Act,1958 or The Factories Act,1948.Leaves provisions are there in both the enactments. It is made clear that there is no provision in the labour laws for encashment of leave during service period but these are encashed at the time of making of full & final payment to the employee. Maximum no of leaves which can be encashed is 30 under EL head. If the mgt. wishes then this limit can be increased.


Skylark Associates, Gurgaon (Haryana)
(Labour Law & Legal Consultants)
From India, Delhi
Dear An employee can accummulate 30 E L. Regards, R.N.Khola Skylark Associates, Gurgaon (Haryana) (Labour Law & Legal Consultants) 09810405361
From India, Delhi
The organisation should make a leave policy wherein all the leaves like sick leave, casual leave, privilege leave or earned leave are clearly defined... As far as EL is concerned.....
if an employee, has 50 EL balance.. then a policy should be made that at the end of every year 20 EL should be kept balanced and that to EL can be availed only thrice in a year. So and employee can avail EL encashment thrice and that to keeping 20 balance...for that year....
From India, Mumbai
dear vineet, greatings of the day, as per the punjab shops and commercial establishment act 1956, accimulation of pl is upto 30, so u can encash the balance leave as per ur organisation’s rule
From India, Delhi
Dear Vineet,

Please find the below information on E.L.'s....



1. All permanent Staff.
2. EL is calculated for the days worked during the previous calendar year.


1. 1 El for every 20 working day (if 6 days per week);
2. EL will be credited to permanent staff only on completion of 1 yr of service with the Comp.
3. The days served under probation will be taken into account for EL eligibility.
4. EL can be availed only on prior approval.
5. Nation/Declared/Festival/Weekly off days can be prefixed and /or suffixed to EL.
6. Intervening National/Declared/Festival/Weekly Off days will NOT BE counted as part of the leave.
7. Half day of EL cannot be taken.
8.Balance EL remaining un-utilized as on 31st December can be carried forward.
9. EL can be accumulated for a maximum of 90 days.
10. Accumulated EL over and above 90 days can be encashed at the rate of last basic pay drawn on the 31st of march of during final settlement in case of resignation /retirement/termination.
11. At the time of resignation/retirement/termination the balance EL will be en cashed at the basic pay rate as on the day of resignation/retirement.
12. any absence of more than the number of EL sanctioned will be treated as leave without pay, unless given valid reasons to the management.

Jaya A.K.
From India, Bangalore
Thanks for the info Jaya. But I've one doubt on point no 5 & 6,as in my organization, Public holiday can be excluded from PL, but we treat weekly of as Leave if a person is taking a PL continue (if WO coming inbetween his Leave period). So I want to know, is it a policy of your organization or Govt?? Also we can accumulate 100 days PL in a calender yr. More than 100 days PL will be encashed (it is our company policy).
From India, Madras
Hi jaya,
Your info on ELs is crisp and clear! fantastic! Thanx very much!!
My plea to you (all the members of the CiteHr) is to answer the querries, if you know the correct answer only. My request to senior HRs to attend the querries for the benefit of the CiteHr members!! Try to provide the answers with suitable examples. Please do not neglect!!!
Please do the needful! Thanx once again to Jaya! keep doing such a good work! Have a great day!!
Satish Kumar Renikunta
From India, Hyderabad
R/Mr. Khola,
As per Factory Act, CHAPTER VIII (f) (iv):
The unavailed leave in a calender year, can be carried forward in the next year, but such a carry forward should not exceed 30 days for adult or 40 days for child worker. However, leave refused, in accordance with this chapter, can be carried forward, without any limit.
Mr. Khola, I just associated with you few days before, so I would like to know about the applicability of above clause on Punjab Shop & Commercial Establishment Act, 1958 also, so pls revert back with your valuable views.

From India, Jaipur
Dear Vineet,

Your Organisation does not have leave encashment policy, as you query stated. In My opinion and practice you may have to prepare a policy for the same to avoid such a type of issues amongst employees. Systems / policy serve the Organisation in better way, in other hand they do not have to raise the issues if you have made it clear with a policy.

It is linked with companies Joining and Relieving policy, if you have a one month notice period to relive a employee, it should be fixed with 30. Employer / employees want their hassle free relieving at the time of their full & final. If your Organizational policy asks for a three month notice period then it should be 90 days. See if anyone gets a better opportunity and wants to leave Organisation there are not harm to leave the company. In the other hand Organisation has their 30 or 90 whatever earned leave in their account to enchase there are also happy to relive. Provided that it is clear for all employees that this encashment should take place once in a year.

God bless you.
From India, Gurgaon

Section 14 of the Punjab Shops Act,1958 provides entitlement of Cl,SL & EL for an employee. Under The Factories Act,1948 one gets one EL for every 2o days of actual working in the preceding calender year while under The Pb. Shops Act the ratio of EL is the same but according to section 14(1)(a) of this Act every employee who has been in employment for not less than 20 days in a year shall be entitled to one day's E L for every such 20 days in case of adult employee. Under F. Act we take calander year while under Shops Act 'year' means a year commencing on the first day of April.

This implies that under F.Act one have to qualify himself for El by working 240 days in the calender year & will entitle to El @ one EL for 20 days actual working while under the Pb. Shops Act an employee will get EL on same rate but the condition is only of employment & that is too for only 20 in a year which will commence on 1st of April. This is the noticeable difference.

As far as the question of accumulation of leaves is concerned this is the same i.e 30 days in case of adult 40 days in case of young person under the Pb. Shops Act. This may be more beneficial/ favourable if there is a settlement/ agreement between the employer & employee. This is further clarified that according to section 14 (2) leave provided when applied for, be granted except for a valid reason to be communicated in writing by the employer to the employee within 15 days of the application:

Provided that leave so refused shall, if applied again, be allowed during the year. This does not leave any scope for any refusal of leave & for any addition of No. of EL in the total of statutory limit of accumulation of Leaves.

Hope this will help you in understanding the difference of proviso of EL under The Factories Act & The Punjab Shops Act,1958 as applicable to the State of Haryana.


Skylark Associates, Gurgaon (Haryana)
(Labour Law & Legal Consultants)
From India, Delhi
Dear Vineet,
you may incorporate a PL encashment policy in your organisation adopting a simple formula. Kepp 30 days minimum balance in the ledger of every employee to meet the eventuality of not giving Notice of leaving the company. 50 % of the rest PLs in acount of an employee say, (Total PL-30)/2 be encashed at the prevaling Basic + D.A. rates.
From India, Delhi
In a Govt PSU, The Maximim number of EL that can be accumulated is max (300) and the EL that can be encashed in a year is 30.
Please note that this pertaining to Govt Organization and PSUs, it varies from Organization to Organization, for private companies the rule varies and its much less than the one mentioned above.
From India, Hyderabad
Dear Vineet,
I wish to answer for your query as follows :
If Earned leave is not availed in a calendar year, it can be accumulated to the maximum limit of 42 days and it can be encashed [as per The Shop and Establishment Act, 1948 under chapter VII, section 35] if employees or associated members are unable to accumulate earned leave in given limit.

From India, Mumbai
I work in Public Secor and the maximun EL(PL) That can be accumulated in our organisation is 240 beyond which it lapses and the maximum E.L that can be encashed is 30 days .

From India, Mumbai
This varies from organizatin to organization depending on their HR Policy.
However I give below the details required by you as per the HR Policy in the company where I am working -
Accumulation of Earned Leave - employees may not carry forward more than 60 days.
Un-utilized Earned Leave as on 31st December each year can be carried forward to the next calendar year and can be accumulated up to a maximum of 60 days.
Fifty Percent of accumulated earned leave can be encashed at the option of the employee, subject to a minimum of 30 days. However, the balance after encashment shall not be less than 30 days.
At the end of the service, unutilized earned leave can be encashed. Encashment of Earned Leave shall be on gross salary only.
Earned Leave can be pre-fixed or suffixed to any other kind of leave or holidays and any intervening holiday or weekly off will be considered as Earned Leave.
From India, Hyderabad

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