Is Leave Encashment Mandatory in Full and Final Settlements? Urgent Advice Needed

Dear All,

I am working with a manufacturing cum engineering firm in the HR domain. I would like to know if it is mandatory to give leave encashment in full and final settlement.

Please suggest me as it is urgent.

We are into retail. We don't give any leave encashment. I have read the Shops and Establishment Act for Haryana and Delhi. It didn't say it's mandatory to encash leave. Accordingly, we give 6 CL, 9 EL, and 15 privilege leave. These 15 days of privilege leave can be accumulated up to 30 days. When a person resigns, these leaves lapse. Please let me know if this is correct as per the law.

Hi,

What if a company is settling the leaves against the notice period instead of paying for the same.

Swati Jain

In FnF, notice period deduction is on gross while PL/AL/EL payment is on basic as per the Factory Act, Section 79.

Hi,

If you are in manufacturing and this is compulsory, because this leave is earned by employees either under the Factory Act of 1948 or any other applicable act.

Regards,
Manoj

Dear Manoj,

In F&F settlement, SL, CL, and PL should be considered for settlement calculation. If while deducting notice pay we are deducting based on gross salary but while leave encashment on basic, is there any law behind it? If yes, which act and section cover this?

Regards,
Ravi

Dear Ravi,

As per the standard set under the statute, only PL encashed; other leaves will lapse. However, this depends on your leave policy. You should deduct the remaining amount compared to your notice, which should be paid to the concerned employee as per the leave rules under the applicable acts, i.e., the Factory Act-1948 and The Industrial Employment (Standing Orders) Act-1946.

Please check.

Regards,
Manoj