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Dear All,
I have recently joined organization which service industry, where there is practice of enchasing the Compensatory leave.
i have some doubts about it , please help me in resolving them.
a) can we encash the compensatory off (legally) because as per the law we can only encash PL at time of Retirement or at time of exit @ of basic drawn at that time.if yes please tell under which act it is applicable.
b)if i need to pay the compensatory off then under which salary head we have to refer so that there will not be legal obligation on companies end in future.
c)do we need to pay compensatory off on the basis of basic or on the gross salary drawn by an employee.
d)is there is any clause through which i can refer to & state to an employee that we can not encash the compensatory off.
Looking forward for the above mentioned queries.
Arpit khare
I would like to tell you that, about the compensatory off companies has different policy which must be mentioned in their policy and authorized by management representative and some companies are includes the policy about compensatory off in their Standing Order.
Legally Employee must get a weekly off 7 days or company needs him on seventh day, he/she need to get that off within in next 3 days.
Hence you need to prepare a policy about compensatory off and get authorized by Labour Officer & Management.
Dear Sandeep,
I need a clarification on last statement do we need get it authorized by Labour Officer that to in service industry.
Is this mandatory on company end to do so because in my previous organization ,we do not have such policy.
There is no law which states to encash any leaves, it is always a policy of the company to compensate for the Leaves which are not given to avail by the employer to their employees.
It is similarly like paying double payment of the wages for working employees on any festival holiday. Last but not the least the wages should be calculated on Gross and not on basic.
Dear Arpit, Compensatory off cannot be encashed, it can only be availed. The practice is that it should be availed within a week and cannot be clubbed with other leaves. Regards, Deepak Vasudevan
Dear Arpit,

If you are talking about workmen, services of them are governed strictly under Labour LAWS. According to provisions under Factories Act,weekly off if not given, then comensatory off is to be given 3 days before or 3 days later also from original offday. If it is C/Off for management staff, then such items with other groceries addressed as per companies' HR Policies. Different policies and no similarity found because they have internal and external factors like you have. I had experience in dealing this complex issue. The encashment of C/Off if allowed then it was observed that facility got gainfully misused by staff in concert . Secondly, the very encashment facilty allowed accumulation of C/ff as it allowed encashment any time during year and at times more than one employees were observed away from work . So instead of c/off giving a practical solution, it stemmed before us with other complex issues. So we decided that C/Off has to be in any case utilized in 4 weeks and if not availed by concerned gentlemen then it will lapse automatically .


RDS Yadav

Director-Future Instt of Management and Technology

Labour Law Adviser

There is short route for encashment. In exceptional cases where the estt. wish to assist the sincere, dedicated employees who contribute more than 100%, who cannot be allowed to utilise the days, can permit crediting those days to EL/PL a/c so that these days does not elapses. Thus indirectly help these guys gain monetary benefits by encashing thru' this route. However there is no hard and fast rule in respect of days earned and to utilise or non utilisation thereof.
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