Understanding Leave Encashment: How Many Unused Leaves Can Be Carried Forward?

Hello Everyone,

Since I am working on the leave policy of my organization, I require the following information:

According to the law, how many unused leaves can be carried forward? Is there any restriction on the number of days to be accumulated? Is there any predefined percentage of unused leaves to be encashed?

Regards,
Leena.

Dear Lina,

There is no mandatory provision regarding the accumulation of leave. The only mandatory requirement is the encashment of PL/EL upon an employee's exit. Others would agree with my views.

ACCHR

Thank you, ACC HR, for the reply. However, I believe that under the Mumbai Shops and Establishment Act, we may encash accumulated leaves exceeding 240 days at a 60-40% rate, i.e., 60% for carry forward and 40% for encashment.

I would like to inquire if there is any specific law governing encashment. I received this information verbally and would appreciate having the official notification. If anyone can assist in this matter, it would be greatly appreciated.

Hi,

There is no specific law regarding this, but most of the time, 2/3 of the total EL/PL can be encashed at the end of the year, and the balance is carried forward.

Regards,
Vineet

Hi Leena,

Generally, most companies follow the central government policy for encashment of leaves. As ours is a software company, we adhere to the Central Government's leave structure, i.e., 7 CL, 7 SL, and 20 AL per year. CL cannot be carried forward after a year. SL can be carried forward to the next year but cannot exceed 20 days. AL in some companies is encashable, while some companies require employees to avail of them within the year in two installments, such as 10 days at a time (including holidays).

Hope this information is helpful.

Email: mdevi442@gmail.com

In my organization, we provide 21 days of yearly PL/EL to an employee. Out of these, a maximum of 9 days can be encashed, subject to leaves unavailed and pending in his account. The remaining days can be carried forward to the next year. The maximum accumulation allowed is 50 days, and any leaves beyond that limit will lapse on a year-to-year basis. The maximum encashment an employee can avail of is 50 days in case of resignation or upon disassociation with the company for any reason. However, these accumulated leaves cannot be encashed during the employee's tenure with the organization. On an annual basis, the employee can encash only 9 days.

Dear,

Depends on the respective State [Shops & Establishment Act]. It has the respective provision.

In Mumbai, leave with pay can be accumulated up to 42 days. In Karnataka, the total number of days of leave that may be carried forward to a succeeding year shall not exceed thirty days in the case of an adult.

In Andhra [as per the Shops and Establishments Act], leaves: Every employee who has served 240 days or more during a continuous period of 12 months in any establishment shall be entitled during the subsequent period of twelve months to leave with wages, which may be accumulated up to a maximum period of sixty days.

Generally, PLs can be accumulated up to 45 days. If at the time of the credit of PL, the accumulation goes beyond 45 days, the excess leave over and above 45 days shall automatically lapse. Similarly, PLs can be encashed keeping 30 days in balance. The entire leave credited to the employee's account will be encashed at the time of resignation/retirement. These rules differ from state to state and company to company. The above encashment rule is based on the Delhi Shops & Establishment Act.

With Regards, V. Sounder Rajan

E-mail: rajanassociateslawfirm@yahoo.com, rajanassociates@eth.net, rajanassociateslawfirm@gmail.com

Dear Leena,

I am in a PSU where we can accumulate a maximum of 240 days of privilege/earned leave. No PL/EL gets accrued beyond 240 days. To avoid the overflowing PL which lapses, we usually encash PL. However, we need not wait for the maximum accrual of PL.

Regarding PL encashment, a maximum of 30 days can be encashed once every 2 years. You may consider fixing this as an encashment block, which may span 2 financial years or 2 calendar years for easy administration.

With regards,
Aadhirai G

Dear Mr. Sunder Rajan,

Is there any leave policy for Gujarat state similar to what you have mentioned for Mumbai and Karnataka states? Could you please guide me on the rules and regulations of the leave policy in a software company in Gujarat?

Thanks in advance.

Vasanti
email: vasantisagar@yahoo.com

Hi, I'm Yuva. I'm a fresh HR. Can anyone help me with proration of leave? In my company, we have 7 sick leaves, 7 casual leaves, and 12 annual leaves for a year. I have an employee who joined my office in July 2008. Will he also enjoy the same number of leaves as other employees do, or do the leaves have to be prorated? If yes, kindly help me with the same.

I am working as an accountant in a private organization. I have some doubts about gratuity. Please clarify about gratuity. How to calculate gratuity, who is eligible for gratuity, and what percentage is given?

Thank you.

Dear,

Please use a separate or similar thread for your query on gratuity as this relates to leave encashment.

Dear Atul,

I do not think there is any 'Gujarat Act' which has provisions relating to entitlement of leaves.

With Regards,
R.N.Khola

Hello,

Please tell me the total number of leaves entitled in one calendar year for an employee under the Gujarat Act.

-Atul