Can Employers Encash Earned Leave Quarterly? Seeking Insights on Legal Guidelines in Maharashtra

Dear Sir,

We are a medium-sized manufacturing company (Private Limited) registered under the Factories Act in Pune, Maharashtra.

My boss, MD, wants to encash the earned leave - leave on a quarterly basis. As per my best knowledge, the employer has to keep a minimum of 30 PL to the credit of the respective employee, and over and above can be encashed.

I request all seniors to shed light on this matter with any Apex Court Judgements.

You can assist me at [Login to view].

Thanks in advance.

Prashant

Kindly explain what your director wants exactly. He might be planning to opt for leave encashment, which is followed in many small companies. In this system, the company considers every leave taken by an employee as Leave Without Pay, deducts the salary, and provides encashment at the end of the year based on a ratio of 1 day leave for 20 days of work (for adults).

Although the above system is followed in many small companies, it is not permitted by law, and you could attract penal provisions for implementing it. Please correct me if I am wrong!

Thank you.

I want to know the leave rules under the Maharashtra Govt. Factory Establishment Act. Also, could you clarify how EL encashment is calculated—on basic salary or full pay?

Thanks & Regards