Can We Simplify Leave Management by Allocating Fixed Annual Leaves and Encashing Unused Days?

Dear Friends,

I am working with Facility Management Co. and I want to know if there is any way out by which we can avoid maintaining a leave register. I mean, can we allocate fixed leaves to employees for a year and encash those leaves if they remain unused at the end of the year? Please consider the legal aspects as well.

Thank you.

Hi Yogendra,

Most organizations have three main types of leaves:

1. Privilege leaves / Paid leaves / Earned leaves - 16
2. Casual leaves - 8
3. Sick leaves - 8

Casual and sick leaves can only be taken within the same financial year, while Privilege leaves can be carried forward to the next financial year and can also be encashed.

In some companies, a leave policy known as All Purpose Leave (APL) is implemented, allowing for 30 to 32 leaves in a calendar year. However, employees are usually required to utilize at least half of these leaves as only half of the APLs can be carried forward to the next year; the rest will be forfeited.

Some companies provide options for encashing leaves – either on a yearly basis or only upon separation from the company.

It's important to note that these policies may vary across organizations.

Hope this information is helpful.

Regards,
Amit Seth

Even CLs are encashable these days. The reason is very simple: unscheduled leaves affect the bottom line. So, apart from giving an attendance allowance (e.g., 500/- every month for people not availing leaves), companies encash the entire leaves unavailed at the end of the year. Just keep in mind that such a policy is not a garb for forced labor.

Dear Yogendra,

Amit has already offered you the position as it exists in many companies, and some companies are also allowing encashment of CLs. However, the leave policy should be in line with the overall HR policy of the company, which determines the path, orientation, and direction of such employee-related policies.

There are two schools of thought on leave encashment. One is that employees must take leave to rejuvenate themselves. The second is to discourage them from taking leaves by announcing rewards and encashment policies. Your company has to decide on the broad view first.

In any case, you cannot do away with the leave register/record because it would be easy for you to answer their queries from time to time, which are bound to arise sooner or later.

Sunil Chandra
www.piiconsultants.com

Thanks, Amitji.

Is it possible to inform the employee directly at the time of joining that they will receive paid leaves for a year, which can be encashed if not availed by the end of the year? This way, we can maintain a record of all leaves without the need to separately track CLs or SLs, etc.

Dear Sunilji,

Is it possible that we only maintain one register of leave instead of separate registers for CLs, SLs, etc...