Is Leave Encashment Mandatory by Law for Software Companies in India? Seeking Clarity

Hi,

I work for an MNC, and our corporate handbook (released about 2 months back) states that there is no leave encashment for staff. However, this is a very standard practice in India. I would like to know the statutory regulation regarding leave encashment. Is it mandatory as per the law? If yes, which act and what section? We are not a factory but a software development house in Chennai.

Thanks,
Sivaraman

Dear K R Sivaraman,

Please go through your State Shops & Commercial Establishment Act and examine the leave provisions. You will certainly find the answer to your query.

Regards,
R.N. Khola
Sr. Associate

Hi Seniors,

I am an HR professional. I am appearing for an interview this Monday with one of the Retail Giants in India for a position of HR Generalist + Compliance Analyst. Please advise me on the major applicable compliance rules and laws that need to be abided by all companies as a part of HR compliance.

I will be very thankful to you.

Regards,
Kanika Gupta

Dear Shivraman,

The Bombay Shops and Establishment Act of 1948 will be applicable to you. As per the above-mentioned act, 21 days of earned leave are permitted in a year. If you do not take the leave, the balance will be accumulated and carried forward in your account. The maximum leave you can accumulate is up to 42 days, which will be encashed when you leave the organization. It is not right to encash leave while in service.

If you have any other doubts, please feel free to ask.

Thank you,
JS Malik

Dear JS Malik,

Thank you for the information, but what about the CL encashment if the company denies to encash it at the end of a financial year? Which Act/Law supports this?

Regards,
Lav

I have checked the Punjab Shops and Establishment Act (applicable in Haryana as well). Leave encashment is not legally compulsory. We are not paying encashment. Earned Leave (EL) can be accumulated up to 30 days.

Dear,

Yes, as per the Punjab Shop and Establishment Act, which is applicable in Haryana and Delhi as well, there is no provision for encashment.

Thanks,
JS Malik

What is the basis of calculation for 21 days PL applicable in Mumbai, Maharashtra, please guide. Also, in which category do drivers fall - skilled, semi-skilled, or unskilled?

Sandeep Prasramka