I need guidance on the following issue.
Please help me with the relevant Act and corresponding case law:
An employee based out of Mumbai working with our company (Reg Office-Lucknow) since June, 2015 resigned in March, 2018. At the time of resignation she had 19 days of Privilege Leave Balance in her account.
My question is:
a) Is the company bound for Encashment for her unearned leaves? If Yes, then under which act and if No then what is the respective statue that supports this?
b) If the company is bound for Encashment of leaves then what would be the calculation for it?
31st July 2018 From India, Lucknow
Is your organisation covered by the Factory or Shop & Establishment ACT? In either of case leave encashment to be proceeded accordingly.
31st July 2018 From India, Pune
Yes, it is covered with shop & Establishment act.
31st July 2018 From India, Lucknow
The ex-employee has to be paid the unused privilege/ earned leaves as part of full and final settlement of accounts upon termination/ resignation from employment. It is not encashment, it is more of settlement of accounts. The calculation is done on the basis of the monthly gross salary of the employee.
31st July 2018 From India, Hyderabad
Both Section 79 of Factories act and section 14 of the Shop establishment act mention encasement of PL upon cessation of employment. In this case, you are bound to encash her unused privileged Leaves.
The calculation will be :
(Her last Basic Pay/30)*Number of PL to be encashed.
Rahul Chhabra
31st July 2018 From India, Delhi
Yes, your company is bound to pay or provide encashment of Earned leave. In the instant case the employee is eligible to get payment for leave on balance 19 no along with leave earned during the year 2018 till her resignation.
The rate of payment on the basis of Basic+DA or Basic as you follow or on which you calculate EPF or the amount you deduct for one day of absent, is the rate.
2nd August 2018 From India, Mumbai
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