Krishna T B R

We have a leave policy which is like this: An employee should accrue 30 days of Leave for eligibility to Leave Encashment. We have provided a total annual leave of 27 days. Employees can avail of this leave in the year Jan - Dec. On 31st Dec, we will see the balance leave and whoever has 15 days of unused leave will be given leave encashment as these employees have 30 accrued leave. And if any employee has unused leaves less than 15, ( 12, 10 ) will be given accordingly. but should have 30 accruals.

But some employees, use only 4 / 5 leaves in the whole year and their leave balance as 22 or 23 unused leaves in the year as of 31st Dec.

Please clarify to me should we pay encashment only for 15 days as per our leave policy, or is there any statutory rule which says we should pay for full unused leaves (22 or 23 days as per the above example). as if now, these excess of leaves of more than 15 are getting lapse. and the employees are very much unhappy.

Please provide me if any such ruling is there.

From India, Hyderabad
Labour Law & Hr Consultant
Hr Manager
Nagarkar Vinayak L
Hr And Employee Relations Consultant
+1 Other

Use factoHR and automate your HR processes

Mobile-first hire to retire HR and Payroll software that automates all HR operations and works as a catalysts for your organisational growth.


Your leave policy says that an employee should have 30 days of Leave as credit balance in his leave account, in order to become eligible for leave encashment. He is eligible to av ail leave encashment for such leaves which are over a nd above 30 days. Is that correct?
You can administer same policy in case of employees who have 22/23 days of leave as credit balance.
As regards, encashment of leave to employees, there is no statutory rules governing such encashment. This depends on the leave policy of company which varies from company to company.

From India, Aizawl
Krishna T B R

Thank you for your response.
The employee who has 30 leave in reserve will be eligible for leave encashment of maximum of 15 days and if less than 15 days, actuals . this is what our policy says. But recently i have heard that whatever unused leave balance , that need to be paid off as leave encashment with no lapse of leave. in our case, the maximum accrual of leave is 30 days only. so i cannot add the unused leave above 15 dys to the credit of the 30 days reserve leave.
Please clarify.

From India, Hyderabad

What is preventing you from making pay off to the eligible employees?
Are you from HR deptt?. If yes, please effect a modification to your leave policy, as follows:
"The employee who has 30 leave in reserve will be eligible for leave encashment of maximum of 15 days and if less than 15 days, actuals . With effect from 00 00 00, it has been decided by the management of company that whatever be the unused leave balance , that will be paid off as leave encashment with no lapse of leave, even if unavailed leave shall be more than 15 days, over and above 30 days reserve balance."

From India, Aizawl

Dear Krishna,
You ought to have mentioned what type of industrial establishment your organization is. As far as I know, statutory surrender of unavailed leave is applicable to EL/PL only that too in the event of termination of employment only. Therefore, if you provide such a facility periodically in the midst of service, this is an extra institutional leave benefit fully governed by the conditions mentioned in your leave policy.
Coming to the no of days leave all put together in a year, it depends on the establishment-specific labor law applicable as well as the kinds of leave admissible under the leave rules/policy of the establishment. Any way, leave can be classified broadly into two categories viz., lapsable leave i.e which gets lapsed if not availed at the end of the calendar year and accruable leave i.e., accruing on the basis of actual no of days worked in a year and carried forward to the succeeding years subject to certain limit on the no of days that can be accumulated, if not availed. If your leave policy provides for annual encashment of unavailed leave of all kinds, the basic idea is motivating full attendance to the extent possible without affecting the choice of employees to avail the leave when the necessity arises without detriment to the employees' work-life balance.
Therefore, the scheme seems fair to me. You need not bother about some individuals resentment in this regard for leave cannot be permitted to be bartered for money undermining the lofty purpose of leave as a beneficial condition universally under the contract of employment.

From India, Salem
Krishna T B R

Thank you so much Mr Radha Krishnan Nair and Mr Umakanthan M Sirs.
The responses have given me clarity as to what need to be done with lapse of leaves.
by the way, we are into stock broking - under Shops & Establishments , Hyderabad - Telangana State.
Thank you once again for your responses,
Krishna T B R.

From India, Hyderabad
Nagarkar Vinayak L

Dear colleague,
For better clarity, leave encashment is of two types: while still in service and after termination of employment.
There is no law which requires you to give leave encashment while in service. That is solely voluntary and you may frame policy in this regard like the one you have. Under your policy , 15 days unavailed leave is encashable if 30 days leave is accrued. Your query is eligibility and quantum of encashment if accrued leave is less than 30 days.
Your leave policy should have covered this situation . To be fair ,you may frame a policy to allow maximum of 15 days encashment of unavailed leave and leave the choice of number of days to be encashed to the employee .
As regards situation of leave encashment on termination is concerned, as per State Shop Acts , all unavailed Earned/Privilege leave is encashable without ceiling. Please check your Shops Act for this .
Vinayak Nagarkar
HR and Employee Relations Consultant

From India, Mumbai
As per provisions of Shops and Establishment Act. Leave encashment is permissible provided an employee during his course of employment had applied for PL/EL and the same is not sanctioned and endorsed in writing on rejection/not sanctioned then the employee becomes eligible for leave encashment. This un sanctioned leaves due would not be lapsed also if there is any provision for maximum accumulation of permissible leaves.
Syed Arshad H Rizvi

From India
As per Factories act , who worked more than 240 working days, whey will be eligible for 1 day for every twenty days worked for workers and others every company makes its own policy.
From India

If you are knowledgeable about any fact, resource or experience related to this topic - please add your views.

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

All rights reserved @ 2022 CiteHRŽ

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