Dear All,

Greetings of the day!

I am in delima, unable to solve it.... can be possible with your valuable guidance.

Delhi Shops & Establishment Act says...

Link: Office Of The Labour Commissioner

22. Leave- (1A) (i) Privilege leave to which an employee is entitled under clause (a) of sub-section (1) or under any such law, contract, custom or usage, award, settlement or agreement as is referred to in section 3, or any part of such leave, if not availed of by such employee, shall be added to the privilege leave in respect of any succeeding period to which he is so entitled, so however, the total period of such privilege leave which may be accumulated by such employee shall not at anyone time exceed three times the period of privilege leave to which he is entitled after every twelve months' employment under that clause or under such law, contract, custom or usage, award, settlement or agreement.

Means.... PLs if not availed can be accumulated upto 3 years.

But I noticed that in many companies, PL is encashed at the end of year if not availed by the employees. This process is not mentioned anywhere in shops and establishment act. Then how can companies frame such policy.....?

2nd problem: We don't have leave policy presently. But in T&C of employees, we mentioned that they would be given 20 PLs per year. Company earlier used to encash leaves at end of year. Later verbally asked employees to avail all PLs by end of year and PLs won't be encashed.

Now one employee resigned, having more than 100 PLs in account. How can I calculate his PLs for encashment in such condition. . . ? Pl help .......

From India, Delhi
When company has communicated to avail the PLs and if not it would not be encashed so there is no question of encashing the 100 PLs as part of the F&F.
Also suggest the leave policy is framed and documented. This will leave no no room for ambiguity. You can also put introduce carrying forward of leaves. For eg if an employee is left with some balance of PL at the end of the calendar year you can give an option to c/f and accumulate upto say 20 or 30 or 40 days and if balance exceeds beyond it will get lapsed.
Hope this info would be useful.

From India, Pune

Thank You very much. You are the only person who has taken initiative to help me on this. Would like to tell you that earlier also, I had raised this query in my other posts. But never got any reply.

Now let me share the thing which I figured to solve this problem:

* For last 3 years, from the date of employee left the company, attendance to be received and based on attendance record, PL accumulation and entitlement for PL encashment, year-wise to be decided. 3 years being considered here, since as per Shops and establishment act, PLs can be accumulated upto 3 years.

* Then for these 3 years, summing up entitlements for PL encashment and make payment.

* Here, we need to note, if any employee's leaves exceed 34 leaves (20PL+7CL+7SL), extra leaves to be adjusted in F&F if not done earlier in respective month.

* Calculating PL,CL & SL on pro-rata basis for last working year. If availed leaves exceed total pro-rata leaves canculated (PL+CL+SL), extra leaves to be adjusted in F&F if not done earlier in respective month.

* If leaves are less than 30 PLs in any year (i. e. PL credited- availed leaves), remaining leaves should be considered for encashment.

This is how I have decided to cope with the situation. You can also advise me if something better than this could be done for making F&F of the resigned employee.

Also, like to know further from you. Our Management verbally asked to stop PL encashment. Employees kept on accumulating PLs. Now asking to encash all PLs. In absence of any written leave policy, how can i convince them from legal point of view. pl suggest...

From India, Delhi
Hi Vishal :
I assume an employee is entitled for 20PL+7CL+7SL each year right.
CL cannot be encashed from legal perspective and also SL. Btw if the employee was covered under ESI then he will not be entitled for SL. Only PL can be encashed at the time of F&F again that is subject to you have a written policy on the same. PL encashment is calculated on Basic+DA.
Addressing your last point well if the policy regarding non-encashment of PLs was not documented and circulated to your staff then it would be difficult to reiterate the management stand. It is very crucial to document all the policy/process related info.
Hope the above info is useful.

From India, Pune
Yes you are right. accept whatever you quoted. Also, discussed with my familiar people regarding availing PLs by end of year and not allowing any encashment for this. There is no point to say it as improper. If company is not willing to allow for encashment, employees should avail PLs.

Furthermore, would like to add, above mentioned method, explained by me is ok, but not 100% right. Proper solution for this is as follow:

Assume, an employee joined on 29th April'96 and left on 31st Jan'12 and annual PL is 30. Calculation for PL encashment will be as following-

Date of Joining- 29/04/96, One year Completion- 28/04/97.

* So, 17.5 PLs Credited on pro-rata basis in Jan'98 for the period of April'96 to Dec'96

* Jan'99- 30 PLs, for the period of Jan'97 to Dec'97

* Jan'2000- 30 PLs, for the period of Jan'98 to Dec'98

* Jan'01- 30 PLs, for the period of Jan'99 to Dec'99

* Jan'02- 30 PLs, for the period of Jan'2000 to Dec'2000

* Jan'03- 30 PLs, for the period of Jan'01- Dec'01

* Jan'04- 30 PLs, for the period of Jan'02- Dec'02

* Jan'05- 30 PLs, for the period of Jan'03- Dec'03

* Jan'06- 30 PLs, for the period of Jan'04- Dec'04

* Jan'07- 30 PLs, for the period of Jan'05- Dec'05

* Jan'08- 30 PLs, for the period of Jan'06- Dec'06

* Jan'09- 30 PLs, for the period of Jan'07- Dec'07, Leaves availed- (from Jan to Dec) 32

* Jan'10- 30 PLs, for the period of Jan'08- Dec'08, leaves availed- (from Jan to Dec) 33

* Jan'11- 30 PLs, for the period of Jan'09- Dec'09, Leaves availed- (from Jan to Dec) 46

* Jan'12- 30 PLs, for the period of Jan'10- Dec'10, Leaves availed 0

* Jan'13- 30 PLs, for the period of Jan'11- Dec'11,

* Jan'14- 2.5 PLs, for the period of Jan'12- Jan'12,

Since employee last worked by Jan'12 and no leave availed, so 30 PLs "for the period of Jan'10-Dec'10", 30 PLs "for the period of Jan'11-Dec'11" and 2.5 PLs "for the period of Jan'12-Jan12" will be considered for PL encashment. Total PLs- 62.5

From India, Delhi
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