Leave Encashment Confusion: When Should Unused Leaves Be Paid Out?

Dear All,

I want to know the procedure of Leave Encashment. In my organization, confirmed employees get 12 casual leaves and 6 sick leaves. So when should the remaining leaves be paid?

Looking forward to your support and guidance.

Thanks & Regards,
Nikita

Dear Nikita,

As per Section 79 of the Factories Act 1948, it is enumerated that:

Provided that the total number of days of leave that may be carried forward to a succeeding year shall not exceed thirty in the case of an adult or forty in the case of a child. Untitled Document

However, there have been recent amendments in 2002 via The Small Enterprises (Employment Relations) Act 2002, which is applicable to the whole of India.

Under Chapter IV - conditions of work, clause no. 11 point 4 mentions that a worker shall be permitted to accumulate leave up to 45 days in addition to the leave entitlement of the current year earned based on the work done by him in the previous year. He shall be entitled to the encashment of the entire accumulated earned leave, including leave earned during the current year pro rata, in case his services are terminated or he quits the service.

Can you send me the calculation of leave encashment? Are there any rules in the Factories Act? Please send me the details about the rules of leave encashment calculation.