Employee Left Before a Year: Should We Pay for Earned Leave Encashment?

Hi,

In our company, we follow the Shops & Establishments Act (Tamil Nadu). One employee joined us on 01.08.2008 and left on 09.07.2009. According to the TN Shops & Establishment Act, every person is entitled, after 12 months of continuous service, to leave with wages for a period of 12 days.

As he did not complete 12 months of continuous service, we did not grant him any earned leave. However, the individual is claiming that since he has terminated his employment, he is eligible for 11 days of earned leave encashment. Should we provide him with the 11 days' encashment amount? Please advise.

Regards,
erv

I didn't understand regarding your leave procedure. Please note that for resigned employees, we have to pay the full and final settlement (FNF) along with any applicable bonuses and leave encashment.

Hi,

Section 25(1) of the TN Shops & Estt Act, 1947 is very clear: "25(1) Every person employed in any establishment shall be entitled, after 12 months' continuous service, to holidays with wages for a period of 12 days in the subsequent 12 months."

Since in this case, the employee is quitting before completing 12 months' continuous service, he may not be entitled to leave encashment.

Regards,
Patrick Ryan

Leave Encashment Under Tamil Nadu Shops & Establishment Act

Section 25(3) of the Tamil Nadu Shops & Establishment Act states, "If a person entitled to any holidays under subsection (1) is discharged by his employer before he has been allowed the holidays, or if having applied for and been refused the holidays, he quits his employment before he has been allowed the holidays, the employer shall pay him the amount payable under this act in respect of the holidays."

Hence, you must pay the leave encashment as per the rules, and the employee is rightful in claiming it.