Leave Encashment and Accumulation: Can We Set Limits and Pay in Installments?

Dear All,

1. Can we pay the leave encashment amount in 12 equal installments?
2. Can we put any restrictions on the accumulation of EL? Can the limit be a maximum of 15 EL?
3. Is there any government order regarding the accumulation of leave and encashment in installments?

Regards,
Sanjay

Dear Sanjay,

First, examine which of the Acts is applicable to your establishment regarding the grant of earned leaves, and then go through the relevant provisions relating to your query.

With Regards,
R.N.Khola

Dear Khola,

I am not sure about the Acts. Could you please provide me with information on the different Acts that are currently in effect along with their details?

Regards,
Sanjay

Dear Sanjay,

According to my knowledge, the following is a list of some Acts which have earned leave provisions:
1. The Factories Act, 1948
2. State Shops & Establishment Act
3. The Plantation Act, 1951
4. The Mines Act, 1952

Please see which of the Acts is applicable to your unit and review the earned leave provisions.

With Regards,
R.N.Khola

As per the government, the encashment of leave is for a maximum of 240 days, i.e., 8 months of gross pay, and it should be paid in one lump sum. Kindly check, please.

Dr. Murali Krishna
MK1271955

As per the government, the encashment of leave is up to a maximum of 240 days, i.e., 8 months of gross pay, and it should be paid in one lump sum. Kindly check, please.

Dr. Murali Krishna
MK1271955

Dear Dr. Murali Krishna,

He is not asking about leave encashment in Govt. In Govt., these are governed by the Central & State Civil Service Rules. In Haryana State Civil Service Rules, this limit is now 300 days. Thus, this may differ from State to State.

With Regards,
R.N. Khola

Dear Mr. Sanjay,

Firstly, your question is not clear:

1. The location of the industry/factory.
2. Whether it can be covered under the Factories Act or the Shops and Establishments Act of that particular state.
3. The accumulation limit depends on your company's leave rules or compliance with the Factories Act.

1. Can we pay the leave encashment amount in 12 equal installments?
Answer: Leave encashment will not be payable in installments.

2. Can we impose any restrictions on the accumulation of earned leave (EL), setting the maximum limit to 15 EL?
Answer: Follow the limit set by the Factories Act or your company's leave policy.

3. Is there any government order regarding the accumulation of leave and encashment in installments?
Answer: The accumulation of leave depends on the company's leave policy. Regarding encashment in installments, it relies on your agreement with the union. Otherwise, you can establish a leave encashment policy for the first time and include conditions as desired.

Thank you & Regards

Dear all,

I too have a doubt in connection with this. If we pay monthly leave wages for those who have not taken all their leave for the month, how will it be considered before the law? Are there any implications in practicing this? Are there any case studies or proceedings for reference?

Kindly revert.

Regards,
Ram

Hi!

As per the general leave rules in the industry, leave encashment should ideally be done at the end of the leave year (Jan/Mar depending on the company policy). However, the employee can be given the liberty to claim the balance earned leave (EL) of the previous year at any time during the current leave year. The rate at which EL is encashed will be based on the current gross pay. It is important to bear in mind that the leave encashment amount is taxable. The maximum number of EL days one can accumulate should not exceed 90 days.

Dear Sanjay,

Mr. Khola has given the right answer. He has gone to great lengths to provide you with a choice of Acts to choose from. Once you are able to decide if your firm is a Factory, Shop/Establishment, Mine, or Plantation, then you can read the related Act and understand the provisions of accumulation of EL.

Well, leave encashment for existing employees can be made in installments. But for those who are leaving the company, it has to be paid along with Full & Final Settlement, in one go.

Vasant Nair