Sick Leave Dilemma: Should Unused Sick Days Be Rewarded at Retirement?

Sick Leave Encashment Query

Ours is a manufacturing company, and we have been granting Sick Leave (SL) to employees. My question is, if Employee X does not take their SL and remains present for many years, while on the other hand, Employee Y takes their SL regularly, what happens at the time of resignation, termination, or retirement? Employee X asks for justification, stating they have been honest and have not used their SL for entire years. Why can't those leaves be encashed as rewards for them?

Kindly suggest what the law says.

Thanks,
Raj

As per the law, sick leave and casual leave cannot be carried forward to the next year. You can find the exact language on your state labor department website where you have registered your company.

Leave Rules and Encashment

Subject to the existing provisions of the law, the employer can establish leave rules. Under normal circumstances, only casual leaves lapse at the end of the year, while sick leaves can be carried forward to the next year and accumulated, subject to certain limits as may be prescribed. The encashment of leaves at the time of retirement or upon leaving the establishment is purely a management prerogative, and there are companies that allow such encashment.

Regards,
Madhu.T.K

Understanding Leave Policies: A Human Perspective

Casual leave should be taken as an added holiday for bereavement, family reasons, or to fulfill a financial obligation, as long as you have never abused this privilege. Note that we are humans, not machines, so we should never attempt to imitate them.

It's okay to take sick leave so that you do not become very sick. It's an indication that you need to give urgent attention to your body so that others, including your employers, do not have to use sick leave. We should get rid of the outdated thought that we should come to work every day. What if our metabolism does not allow us? So relax, do your part, go to work, do your part—no politics, no buttering up of superiors, no tension. You would do well, and if needed, take the leave. Remember, it's a privilege you can exercise. So what if you don't get the gold medal for the employee who never missed any day at work? Perhaps the firm (after you have left) may erect a bust of you and place it in the HR department.

Employee Leave Policies in Private Organizations

In private organizations, rules can be framed that are beneficial to the employees. For example, in my organization, the CLs (Casual Leaves) are encashed at the end of the year for the unavailed CLs. Similarly, SLs (Sick Leaves) are carried forward and encashed at the time of separation.

As per the law, only privileged leaves can be encashed. CL and SL can be availed in a calendar year. Casual leaves will lapse at the end of the year if not availed, but sick leaves can be carried forward to the next calendar year, up to a maximum of 30, depending on the company. If the employees do not avail the leaves at all, they can be adjusted at the time of notice pay and the payment released. However, we cannot encash SL or CL.

Regards,
Hari

As per the general perception in the industry, casual leave lapses at the end of the calendar/financial year, as the case may be. However, both earned leave and sick leave are accumulated to the extent the organization has stipulated in its rules.

Regards,
S.K. Johri