My firm is implementing the leave policy for the first time. They fall under the purview of the Shops and Commercial Estb Act for Karnataka.

EL/PL offered = 1.5 days per month = total 18 days p.a

SL+CL = 0.5 days per month = total 6 days p.a.

Total allowed accumulation of PL in a year = 45 days

Maximum carry forward of PL to next year = 30 days

Total no of employees = 11

Following doubts/queries:

1. Are we obligated under the statutory and legal authorities to pay leave encashment on separation/resignation?

2. If Leave encashment is to be calculated on last drawn basic salary, how many maximum days of PL will be encashable?

3. The management is leaning towards allowing employees to avail their leaves rather than adopting a leave encashment policy, hence I need to know if all firms pay leave encashment and if its a statutory compliance?

4. What options can be provided in absence of a leave encashment policy to employees so that they can benefit from their leaves and the business doesnt suffer due to all employees rushing to avail their leaves before year end.

5. Can we increase the upper limit of the accumulation of PL from 45 days to 60 days and still not offer leave encashment to setoff the leaves to the next year? (Can it be mentioned in the policy that at one time a employee can avail a max of 30 days PL to avoid chaos)

Please suggest as the firm is still a fledgling but it wants to adopt good practices to keep the staff happy.

From India, Pune
1. It is not Statutory under Labour law to adjust the leave against Notice period .
2. It is practice of Organisation to adjust against notice period or not.
3.Our member rightly said balance of Earned leave to be en cash against Full & Final settlement of Individual .
4.Full & final Settlement has to complete .

From India, Mumbai
Reason for withholding encashment of earned leave at the time of retirement is due to non vacation of company quarter since we can not withhold statutory dues like gratuity and PF.
From India, Pune
Dear Gautam

Withholding leave encashment at the time of retirement due to non vacation of company quarter , involves number of issues which are to be looked into separately.

1. What is company policy on allotment of company quarter.

2. As quarter is company's property but at the same time when employee is retiring , there must believe some clause in above case that under which time frame property belongs to company is to be returned.

3. Since it is not a movable asset , some time it is difficult to find accommodation outside for residence outside company area.

4. I believe there must be a clause of retaining company property for a specific period on the basis of paying rent equal to market price.

I am still not convinced that company specifically withhold leave encashment only till the handing over of possession of company property. In case of retiring employee after serving a long period, under principal of natural justice , company might have retained some amount from his full and final dues , till vacation of residential property which might have been misconstrued by an employee.

Matter needs to be resolved under allotment rules of company property. Legally one cannot withhold leave encashment specifically as ground against clearance of no dues certificate. Since other dues has been paid it clears company's intention of accepting retirement on the basis no dues provided by employee on the date of retirement.

Since the matter pertains to service(s) to be rendered by an employee to company and a contract between employer and employee forming a part of terms of service / employment.

I believe it is justified on behalf of employer to hold some payment as security and as a deterrent to misuse of company property. At the same time it should be clearly communicated to employee prior to retirement and in this case even today to resolve and follow rules. Communication resolves lot of issues.


From India, Chandigarh
Dear Anand,
There is company policy of retaining company quarter up to three months after retirement. We give six month notice prior to retirement to clear no dues. Since statutory payment like gratuity and PF can't be withheld, and the employee some time do not want to vacate quarter after three month of retirement, we have no option but to withheld other non statutory dues like leave encashment, bonus etc. The employee knows very well that once they got all their dues,it not easy for management to vacate them in a public sector.

From India, Pune
90 days or three months is a good enough time to manage accommodation. It is justified to hold some payment till vacation of company property. My submission in this case will that instead of saying withholding of leave encashment, it should be termed as part payment against security and must be intimated in writing with amount specifically mentioned to the concerned individual to avoid litigation at later stage.
Such cases should be reviewed for amendment in existing policy to avoid conflict because policy is a document which is be challenged at any stage irrespective of company name or employee. Review you policy and take corrective action.

From India, Chandigarh
I resigned from my organization. At the settlement day, the HR refused to encash my remaining leaves.
They are saying that the company does not have any 'leave encashment' policy.
Kindly tell me if its mandatory for a company to give leave encashment to the employee or not?
Or is it like a company's decision to give or not give the leave encashment?

From India, Mumbai
Dear Seniors,

Kindly advice, if any employee is resigning / terminated from his services before completion of one year of service. Is he eligible for earned leave encashment available in his account.

Need clarity on this on urgent basis.

Vikas Sharma
(M) - 9256111222

From India, Delhi
As per DPE's guidelines, earned leave and half-pay leave can be considered for encashment on retirement, subject to overall limit of 300 days. The cash equivalent payable for half-pay leave would be equal to half salary as admissible for half-pay + DA. This facility is, however, available to PSUs employees.


From India, New Delhi

If you are knowledgeable about any fact, resource or experience related to this topic - please add your views using the reply box below. For articles and copyrighted material please only cite the original source link. Each contribution will make this page a resource useful for everyone.

Please Login To Add Reply →

About Us Advertise Contact Us Testimonials
Privacy Policy Disclaimer Terms Of Service

All rights reserved @ 2021 CiteHRô

All Material Copyright And Trademarks Posted Held By Respective Owners.
Panel Selection For Threads Are Automated - Members Notified Via CiteMailer Server