How Should Privilege Leave Be Calculated for Long-Term Employees Resigning?

What is the criteria for calculating Privilege Leave (PL) outstanding at the time of resignation submitted by an employee who has worked for almost ten years? As per the corporate policy where my friend is working, only leave of 60 days can be accumulated/carried forward, whereas he has accumulated 155 Privilege leave days as of today. (He is entitled to 30 PL days in a year).

Can he receive a refund of the 155 days of PL along with his final settlement after resigning from the job?

Rajesh Gupta

Actually, in our company, an employee can carry forward a maximum of 200 PL. Upon accumulating 200 PL, HR will automatically refund the amount. In case the employee resigns in between and has accumulated 155 PL, the refund for 155 days will surely reflect in their full and final settlement.

Dear [Name],

You mentioned that the corporate policy is very clear: you can't accumulate more than 60 days. This implies that any surplus days beyond 60 will be forfeited. Therefore, there is no possibility of a refund for the excess 155 days. You may only be eligible for a maximum of 60 days.

Please let me know if you need any further clarification on this matter.

Best regards

Balakani: You mean Govt rules will not be applicable on leave accumulated by an employee during his service period of 10 years. Leaves will be calculated as per company policy, and he will get 60 days credit against accumulated leave of 155 days.

For example, in the case of Gratuity calculation, the Gratuity Act is applicable while calculating the amount. Is there an act on leave accumulation and refund after an employee resigns from the job? Please advise.

Dear 7fb,

As per the government regulations, leave calculation is based on the calendar year. Therefore, if an employee has more than 60 Paid Leave (PL) days, they can encash the excess in January. However, if the company policy specifies that only up to 60 days of PL can be accumulated and the rest will lapse, then the surplus PL days must be utilized before they lapse.

I do not believe that there will be any encashment for 155 PL days in the Full and Final settlement.

Please correct me if I am mistaken.

Regards,
Suprita Raj

Dear,

The first and foremost thing that comes to mind is why would a person accumulate 155 days leave when the company policy clearly states that no more than 60 days leave can be accumulated. Is the person, in spite of working for 10 years in an organization, still unaware of the leave policy in practice, or is he too foolish to understand the leave policy framed by the company!!!

One more thing, the question of government leave rules doesn't apply here as every company is guided by its own leave rules. The law is very clear as far as the accumulation of PL is concerned. So, in this case, the person concerned will not get more than 60 days PL encashment as on the date of leaving. The rest stands lapsed.

Regards

Dear,

How can his leave balance be 155 if the policy clearly states that only leaves of 60 days can be accumulated/carried forward? You are saying that 30 PLs per annum will be accumulated. For example, at the end of the first year, the PL balance would be 30 (if he/she has not availed any leaves in that year). By the end of the second year, the PL balance would be 60 (first 30 + second year 30). At the end of the third year, the PL balance should only go up to 60, and the 30 PL which accumulated will lapse if not used. In that case, how can the current balance be 155? It seems that some information or clarification is missing.

Assuming that your concern falls under the purview of the Shops and Establishments Act, you need to follow the leave rules of that particular state. After reviewing the leave rules, you can decide on compliance. If paying for 60 days meets compliance, why pay more when it's also specified in your internal policy?

However, if the rules state that all remaining PLs (155 here) can be encashed upon leaving the organization, you must pay for 155 days. Therefore, refer to the Shops & Establishments Act / Factories Act of your specific state to find the answer.

Dear 7fb,

If your company rules allow an employee to encash the excess leave at the beginning of the year as per SREE's example.

Dear Mr. Ash, PGDM,

As per my understanding, there is no clear rule for the accumulation of PL/EL in industrial law. If there is, kindly correct it.

Dear Rajesh,

A simple, plain answer to your query is that your friend can avail leave encashment to the extent permitted by the company's Corporate HR policy only. However, while going through your statement/question, I have observed that your question has not shed light on the following key areas:

1) Is your friend working in a factory covered under the Factories Act or a commercial establishment governed by the Shops and Commercial Establishments (S&CE) Act of the respective state?

2) In case he/she is working in a commercial establishment situated in a state where there are more favorable or unfavorable terms embedded in the S&CE Act of the concerned state, and assuming there are no certified standing orders in the company approved by the appropriate government, the approach to the issue at hand may vary.

3) To address the query with legal precision, it's essential to clarify the dual wording you have used - "Accumulated/Carried forward." For example, one may accumulate up to sixty days from one perspective, while from another viewpoint, one may interpret it as carry forward being permitted for only up to sixty days. As HR professionals, we cannot use terms like this assuming layman's understanding. From my perspective, I would interpret it as after surpassing 3 or 4 years, an individual shall be allowed to carry forward only sixty days, not 90 or 120, which is the total entitlement.

4) Finally, why has he accumulated so many days? Is it due to service exigencies, and the management did not approve leave beyond a certain number of days?

Please let me know if you require any further clarification or information.

Thank you.

Sincerely

In my company, there are half-yearly appraisals in which I have also received feedback. However, starting from next month's salary slip, there was a deduction labeled as excess allowance. I would like to know if it is possible for figures to be deducted as excess allowance even after receiving an increment.