Dear Experts,
As per my contract with the employer, I have a notice period of 3 (three) months or 3 (three) months' gross salary in lieu of notice. I also have a leave sell agreement with the employer after termination.
If I want to leave the organization after 1 (one) month of submitting resignation and having 60 (sixty) days of leave balance in my hand to compensate for the uncovered notice period of 2 (two) months, would the company pay me 2 (two) months' salary during final settlement?
Your expert comments would help me a lot to tackle the situation.
Awaiting your valued response.
Thanks,
Sandipan.
From India, Jamshedpur
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As per my contract with the employer, I have a notice period of 3 (three) months or 3 (three) months' gross salary in lieu of notice. I also have a leave sell agreement with the employer after termination.
If I want to leave the organization after 1 (one) month of submitting resignation and having 60 (sixty) days of leave balance in my hand to compensate for the uncovered notice period of 2 (two) months, would the company pay me 2 (two) months' salary during final settlement?
Your expert comments would help me a lot to tackle the situation.
Awaiting your valued response.
Thanks,
Sandipan.
From India, Jamshedpur
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As a rule, leave is not allowed in the notice period. However, it depends on your company policy. Speak to HR and see. As per the law, encashment of leave at the end of service is mandatory. So logically, I do not see any problem with that as such.
From India, Mumbai
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2501From India, Mumbai
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If your contract says 3 months' gross salary in lieu of notice, then you can very well adjust the leave balance/unutilized leave against your notice. But as Saswata rightly said, speak to the HR first and come to a conclusion thereafter. The seniors will be glad to advise you accordingly.
From India, Ahmadabad
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From India, Ahmadabad
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Sir, there are many firms that allow adjusting the balance of leaves against the notice period. I am aware that leave encashment is mentioned in the Shop and Establishment Act. Hence, balance leaves ought to be encashed and paid for by the employer.
However, if the person utilizes those leaves to adjust against the notice period, it means he is availing those leaves. Should, in this case as well, the company is under obligation to pay for such leaves?
I believe the leaves are to be encashed only if those are unavailed. However, in such a case, the leaves have been utilized by the person by adjusting it with the notice period.
Again, I would like to ask: In such cases (where employees are allowed to adjust leaves against the notice period) and if someone is adjusting 1 or 2 days, it is a different scenario. However, if say a person like this who wishes to adjust 60 days' leaves against notice pay so that he can stop going to this office sooner, what should be the relieving date?
a) Last working day
In this case, say, for example, the person is serving notice for 1 month and came for 30 days, and the rest 60 days were adjusted with leave. Ideally, the last working day was the 30th day, and if we put this date on his relieving letter, how should things be adjusted when it comes to compliance of payment of unavailed leaves during separation?
b) End of Notice Period:
The person is asking to adjust the leaves against the notice period. So ideally he would be absent from work for those 60 days but an employee of the old organization. So he should be relieved at the end of the 90th day (proper notice served).
But in this course, if the person absented himself from the old company and was working with a new company, he happens to be on the muster and payroll of 2 different companies at the same time. How to deal with this?
From India, Mumbai
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However, if the person utilizes those leaves to adjust against the notice period, it means he is availing those leaves. Should, in this case as well, the company is under obligation to pay for such leaves?
I believe the leaves are to be encashed only if those are unavailed. However, in such a case, the leaves have been utilized by the person by adjusting it with the notice period.
Again, I would like to ask: In such cases (where employees are allowed to adjust leaves against the notice period) and if someone is adjusting 1 or 2 days, it is a different scenario. However, if say a person like this who wishes to adjust 60 days' leaves against notice pay so that he can stop going to this office sooner, what should be the relieving date?
a) Last working day
In this case, say, for example, the person is serving notice for 1 month and came for 30 days, and the rest 60 days were adjusted with leave. Ideally, the last working day was the 30th day, and if we put this date on his relieving letter, how should things be adjusted when it comes to compliance of payment of unavailed leaves during separation?
b) End of Notice Period:
The person is asking to adjust the leaves against the notice period. So ideally he would be absent from work for those 60 days but an employee of the old organization. So he should be relieved at the end of the 90th day (proper notice served).
But in this course, if the person absented himself from the old company and was working with a new company, he happens to be on the muster and payroll of 2 different companies at the same time. How to deal with this?
From India, Mumbai
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Hi Ankita,
I am in a hurry, so giving a short answer. (If more detailed explanation is required, I will add to the thread later).
The law requires reimbursement/encashment of pending leave on termination/separation. It does not provide for leave to be utilized during the notice period. In fact, most companies will not allow leave to be taken during the notice period. If it is a day or two or some proven medical condition, they will consider it. But again, it's the company's decision. The employee can't force them to consider it.
"Sir, there are many firms that allow adjusting the balance of leaves against the notice period. I am aware that leave encashment is mentioned in the shop and establishment act. Hence, balance leaves ought to be encashed and paid for by the employer. However, if the person utilizes those leaves to adjust against the notice period, it means he is availing those leaves. Should the company be under obligation to pay for such leaves in this case?
I believe the leaves are to be encashed only if those are unavailed. However, in such a case, the leaves have been utilized by the person by adjusting it with the notice period.
Again I would like to ask: In such cases (where employees are allowed to adjust leaves against the notice period) and if someone is adjusting 1 or 2 days, it is a different scenario. However, if, say, a person like this who wishes to adjust 60 days leaves against notice pay so that he can stop going to this office sooner, what should be the relieving date?
a) Last working day: In this case, say, for example, the person is serving notice for 1 month and came for 30 days, and the rest 60 days was adjusted with leave. Ideally, the last working day was the 30th day. If we put this date on his relieving letter, how should things be adjusted when it comes to compliance of payment of unavailed leaves during separation?
b) End of Notice Period: The person is asking to adjust the leaves against the notice period. So ideally, he would be absent from work for those 60 days but an employee of the old organization. So, he should be relieved at the end of the 90th day (proper notice served). But in this course, if the person absented himself from the old company and was working with a new company, he happened to be on the muster and payroll of two different companies at the same time. How to deal with this?
From India, Mumbai
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I am in a hurry, so giving a short answer. (If more detailed explanation is required, I will add to the thread later).
The law requires reimbursement/encashment of pending leave on termination/separation. It does not provide for leave to be utilized during the notice period. In fact, most companies will not allow leave to be taken during the notice period. If it is a day or two or some proven medical condition, they will consider it. But again, it's the company's decision. The employee can't force them to consider it.
"Sir, there are many firms that allow adjusting the balance of leaves against the notice period. I am aware that leave encashment is mentioned in the shop and establishment act. Hence, balance leaves ought to be encashed and paid for by the employer. However, if the person utilizes those leaves to adjust against the notice period, it means he is availing those leaves. Should the company be under obligation to pay for such leaves in this case?
I believe the leaves are to be encashed only if those are unavailed. However, in such a case, the leaves have been utilized by the person by adjusting it with the notice period.
Again I would like to ask: In such cases (where employees are allowed to adjust leaves against the notice period) and if someone is adjusting 1 or 2 days, it is a different scenario. However, if, say, a person like this who wishes to adjust 60 days leaves against notice pay so that he can stop going to this office sooner, what should be the relieving date?
a) Last working day: In this case, say, for example, the person is serving notice for 1 month and came for 30 days, and the rest 60 days was adjusted with leave. Ideally, the last working day was the 30th day. If we put this date on his relieving letter, how should things be adjusted when it comes to compliance of payment of unavailed leaves during separation?
b) End of Notice Period: The person is asking to adjust the leaves against the notice period. So ideally, he would be absent from work for those 60 days but an employee of the old organization. So, he should be relieved at the end of the 90th day (proper notice served). But in this course, if the person absented himself from the old company and was working with a new company, he happened to be on the muster and payroll of two different companies at the same time. How to deal with this?
From India, Mumbai
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Thank you, sir, for a quick and crisp response.
The reason I asked this was when I was working as a recruiter in my previous organization, I had a person who had to serve 45 days of notice while my client wanted someone with a maximum of 1 month's notice. The candidate said that he has some 20 or so leaves to his credit, and his employer would allow to adjust these accumulated leaves against the notice period (as per their policy), and he can be relieved earlier by the end of 30 days. So this actually didn't strike me then. But now I am highly confused with the questions shared in the latter part of my above post. Thanks in advance.
From India, Mumbai
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The reason I asked this was when I was working as a recruiter in my previous organization, I had a person who had to serve 45 days of notice while my client wanted someone with a maximum of 1 month's notice. The candidate said that he has some 20 or so leaves to his credit, and his employer would allow to adjust these accumulated leaves against the notice period (as per their policy), and he can be relieved earlier by the end of 30 days. So this actually didn't strike me then. But now I am highly confused with the questions shared in the latter part of my above post. Thanks in advance.
From India, Mumbai
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The employee has to be relieved on 30th day and the rest 60 days are considered as notice served under buyback
From India, Ahmadabad
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From India, Ahmadabad
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Hi Ankita,
As promised, I am now giving a detailed answer to your queries.
First, most companies will not allow leave during the notice period unless they simply want to get rid of the employee. The notice period is meant for searching a replacement and handover of work and duties in a manner that the new employee can continue without a problem. So allowing leave or adjusting leave during the notice period is counterintuitive.
If you do allow the leave to be adjusted, what you are doing actually is to allow short notice. The employment terminates immediately (before his leave starts), and the rest is to be given as leave encashment with full and final settlement.
True.
Since the days he is adjusting in the notice pay is actually short notice, employment terminates at that point when he is no longer coming to work, and the leave balance at that point is encashed (therefore probably paid at basic + da basis).
The relieving date will be the day he stops working, not the day his leave gets over.
Again, as explained, since termination is on the 30th day, the balance is leave encashment, and you will not have any problem with compliance records.
I think I covered this also above.
Remember also that if you do not follow that, you are liable for higher gratuity, bonus, accident relief, and a whole lot of other things.
From India, Mumbai
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As promised, I am now giving a detailed answer to your queries.
First, most companies will not allow leave during the notice period unless they simply want to get rid of the employee. The notice period is meant for searching a replacement and handover of work and duties in a manner that the new employee can continue without a problem. So allowing leave or adjusting leave during the notice period is counterintuitive.
If you do allow the leave to be adjusted, what you are doing actually is to allow short notice. The employment terminates immediately (before his leave starts), and the rest is to be given as leave encashment with full and final settlement.
True.
Since the days he is adjusting in the notice pay is actually short notice, employment terminates at that point when he is no longer coming to work, and the leave balance at that point is encashed (therefore probably paid at basic + da basis).
The relieving date will be the day he stops working, not the day his leave gets over.
Again, as explained, since termination is on the 30th day, the balance is leave encashment, and you will not have any problem with compliance records.
I think I covered this also above.
Remember also that if you do not follow that, you are liable for higher gratuity, bonus, accident relief, and a whole lot of other things.
From India, Mumbai
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PF Contribution on Leave Encashment - Clarification by EPFO.pdf
SC -PF judgment on No PF on Leave encashment.doc
EPFO Circular Leave Encashment.jpg