Leaving Your Job in India: Can You Cash Out Your Unused Privilege Leave?

Hi Manish L Kotian,

I wanted to know if, as per Indian law, the balance of privilege leave will be encashed when we leave or resign from the company.

Regards,
[Your Name]

Yes, absolutely.

Balance PL/EL will be encashed based on the last Basic Salary.

Regards,

Hemant Agarwal

I also have some confusion about the calculation of encashment of leave, whether it will be on basic plus DA or on gross. In my opinion, it should be on the gross salary instead of basic if there is a concept of CTC. But if there is no concept of CTC, then it may be on basic plus DA, and no one will raise an objection.

Senior members like RN Khola and Malik, etc., please clarify the same.

As Hemanth said, even in our company, leave encashment is done on the last drawn basic + DA. However, if an employee takes excess leave, then the recovery is done on the gross salary.

Giri

Hi,

Most of the companies follow the system to calculate the leave encashment based on the last drawn basic salary. This is because the CTC includes PF, gratuity, which are independent components with their own calculations as per the law. Therefore, the basic salary is considered the primary factor for calculating leave, medical benefits, and bonuses. Some companies may also include DA.

Hope this clarifies.

Regards,
Gayatri

Basically, PL is paid in cash to the employee based on (basic + DA). It may be paid on the Gross Salary depending on the company.

Regards,

Sandeep Kumar

Hi,

As per our company practices, encashment of PL would be based on your last basic salary drawn. If there are excessive leaves, they will be deducted from the gross salary. Could you please let me know what is as per company/labour law? This will help clear my concepts as per statutory requirements.

Thanks,
Anu

Not necessarily. As per the law (Factories Act, I presume), there is no accumulation over 30 days allowed. Please check. However, leave for the part of the year will have to be encashed. Also, you should check your company's HR policy.

Hi,

I just want to add one query: can management deny leave encashment? I mean, is leave encashment mandatory as per Indian Law?

Hi seniors. I just want to add one query: Can management deny leave encashment? I mean, is leave encashment mandatory as per Indian law.