Leave Encashment Confusion: How Are Days Calculated and What Are the Legal Obligations?

Dear All,

I have a query regarding whether leave encashment is calculated at 26 days or based on the number of days in the month. Is there any law pertaining to this?

Also, according to the Factories Act, an employee can accumulate leaves for a maximum of 30 days. Can we encash leaves exceeding 30 days, for example, 41 days, to an employee?

Is there a legal obligation for the employer to encash leaves on a yearly basis, or is it done at the time of exit?

Kindly reply with your feedback urgently.

Warm Regards,
Sumiksha Suri

As per the Factories Act, a minimum of 30 earned leaves should be kept so that in case of an emergency, the employee can utilize them. If you are encashing the same every year, then in case of an emergency, how are you going to mark his/her absence in the attendance muster, whether as Absent or Leave?

Hope I have clarified your doubt.

Dear Prashant,

Thank you for the prompt reply, but I still have a lot of doubts in my mind. I asked if there is any law prevailing that dictates leave encashments should be done yearly, or if we can follow the same process at the time of an employee's exit. Additionally, I would like to know whether leave encashment is calculated based on 26 days or the total days in a month.

Thank you.