How Much Earned Leave Can You Encash During Final Settlement or Year-End?

Hi everyone. Can anyone tell me how much Earned Leave (EL) we can encash at the time of Full and Final (F & F) settlement or at the end of each year? Is there a limitation? What do national rules say?

Regards,
Chitra Singh

Welcome to CiteHR

First, see under which Act you are allowed to accumulate Earned Leaves. Earned leaves are encashed at the time of making F & F.

Regards,
R.N.Khola

Hi Everyone. Can anyone tell me how much EL we can encash at the time of F & F settlement or every year ending? Is there a limitation? What do national rules say?

Regards,
Chitra Singh

Mr. Khola has rightly said, under which act do you want to know? Leave rules are separate for factories and shops, as well as establishments. It also varies from state to state. Please clarify your stance to understand better.

Regards

Hi everyone, in Delhi, under the Contract Labour Act and the Building and Other Construction Miscellaneous Provisions Act, how much earned leave can be encashed at the Full and Final Settlement on a year-to-year basis? Is there any limitation? What do the national rules say?

Warm Regards,
Kosh

Hi, according to the Shop & Establishment Act in Delhi, at the time of Full and Final settlement, one person can accumulate a maximum of 45 days of leave. However, companies can amend this policy accordingly.

Regards,
Kirti Arora

Earned Leave Encashment Guidelines

Normally, Earned Leaves (ELs) can be encashed once a year. The number of ELs in a year will vary from establishment to establishment, depending on the applicability of the Shops & Establishment Act, Factories Act, etc. However, every company will:

1. Fix a ceiling for the maximum accumulation of ELs.
2. In encashing ELs, normally, the number of ELs that would be accumulated in one calendar year will be kept as a reserve as a limit. Above such a limit, the balance leaves will be encashed. At the time of full and final settlement, all the leaves to his/her credit will be encashed irrespective of the above limit. This limit for encashing is only to adjust dues, if any, payable by the outgoing employee, to safeguard the company's interest or to pay a sizable amount to the outgoing employee.

Regards

Good to see valuable contributions. One more query on this...

Monthly vs. Yearly Leave Encashment

If we are giving 1.34 days encashment on a monthly basis, earlier considered as a part of CTC, now we want to exclude this option and consider yearly encashment. This change will impact the monthly net pay of the employee. How should we tackle this to convince both the employee side and the employer side?

Convincing Stakeholders

What is the best way to convince employees about receiving 16 days' pay at the year-end? Retention plan suggestions, please.

Thanks,
GVR AVP-HR

Dear Kosh, I do not find any earned leave provisions under either of the Acts, i.e., under The Contract Labour (R&A) Act, 1970 & Rules, and The BOCW (RE & CS) Act, 1996 & the Rules.

Regards,
R.N.Khola

Earned Leave Encashment in Delhi

Hi! Everyone, in Delhi under the Contract Labour Act and Building & Other Construction Misc. Provision Act, how much earned leave can be encashed at Full & Final Settlement on a year-to-year basis? Is there any limitation? What do the national rules say?

Warm Regards,
Kosh

Leave encashment will vary depending on the company policy. There are no specific limits. For example, some companies may have a maximum ceiling of 30 days or 60 days. If you leave the organization before reaching the maximum ceiling, the days will be encashed at the time of leaving, i.e., Full and Final settlement (F&F).

Regards,
Shankar