Understanding Leave Encashment in ITES: What Types and When Can You Cash Out?

Dear All,

I am from the ITES industry. Please brief me about leave encashment.
1. Which leaves (CL / SL / etc.) are eligible for encashment?
2. Is encashment done once a year or at the time of exit?
3. Is encashment done on gross salary or specific components?

Please help me with the answers.

Thanks,
Nivya

Dear Nivya,

Encashment is done on PL's according to law at the time of exit, but some companies follow a practice of encashing the same once a year to decrease their burden. Encashment depends on Company policy but is normally done @basic.

Warm Regards,

Sumiksha

Can anyone please help me to understand the rules for leave encashment in detail? What is the period for it, and how much or what percentage is encashed? It was mentioned by one of the respondents that it is based on Basic Salary.

Leave Encashment is a benefit given in addition to other retirement benefits to employees by many companies. It involves a lump sum amount payable to the employees or their dependents on retirement, death, disablement, voluntary retirement, or even during the service period, etc.

Leave Encashment is typically done only for PL's.

The components for encashment can either be Basic + DA or all components of the Fixed Salary except Statutory. Many companies also shift their Leave Encashment liabilities to LIC by entering into LIC's Group Encashment Scheme.

Hope this information suffices. For anything else, you can contact me.

Dear [Recipient],

Please go through the following data:

1. Which types of leave (CL/SL/etc.) are eligible for encashment?
Ans: Only Earned leave and Sick/Medical leave.

2. Is encashment done once a year or at the time of exit?
Ans: It is provided once a year as well as upon Superannuation/Resignation.

3. Is encashment based on gross salary or specific components?
Ans: Basic, DA, VDA, and Special Allowance are considered for the calculation of leave encashment.

Thank you.

Leave encashment is eligible only for Earned Leave (EL), and it is a benefit given at the time of retirement or resignation. Encashment is done based on the basic salary.

I joined a hospital on 10th December 2010 and left on 16th August 2011. During my job tenure, I had about 29 leaves as Earned Leave (EL). However, my organization refused to give me the encashment for the same and stated the following:

Leave Encashment:

- EL can be accumulated up to 90 days, which can be encashed at the time of retirement.
- Each employee can accumulate a maximum of 10 EL every year, up to a maximum of 90 days.
- Those employees who have accumulated EL more than 90 days will receive the maximum benefit of 90 days only.
- In case an employee leaves before retirement, leave encashment for EL can be given if the service period in the hospital is more than 5 years and accumulated EL is more than 30 days.

They did not provide any appointment letter or terms and conditions document. Can I get my EL encashment done under any law? Please suggest.

Thank you,

Rakesh