How Should We Handle Leave Adjustment and Salary Settlement for Departing Employees?

Dear Seniors,

I am working in a manufacturing company. One of our employees left the organization, so he had to complete a 1-month notice period. However, because his Sick Leave (SL), Earned Leave (EL), and Casual Leave (CL) were in balance, a total of 14 days of leave was still outstanding. He completed 16 days and submitted an application to adjust his remaining leaves. The management relieved him after adjusting the 16 remaining days of leave. However, he is demanding full salary in the final settlement for the actual days worked and also for the salary of the adjusted leave days.

Advice Needed on Leave Adjustment and Salary Settlement

Could anyone please advise on the process I should follow? Are there any laws governing this situation? Should we pay for these days of leave? Can leaves be considered as present days, as they are adjusted only for absences?

Kindly suggest to me.

Regards,
Ashok
[Phone Number Removed For Privacy Reasons]

Hello, this is Priya working in an infrastructure company and handling 2000+ employees in the HR department. After studying your problem, I just came to know that if you can clarify some points that are important for this. So, are you ready?

Points to Address

1. How many privileged leave/earned leave are in his leave account? (Because this is the only encashed leave, neither CL nor SL)
2. If he is referring to CL, he cannot take CL during the notice period.

Please provide clarification if possible.

Thanks,
Priya

Thank you for the immediate reply. His leave balance is as follows:
- EL: 3
- CL: 4
- SL: 3
- Comp Offs: 6

He is requesting salary for all adjusted leave periods. Could you please inform if there is any law stating that PL can only be adjusted at the time of NP?

Regards,
Ashok

Normally, PL/EL will be adjusted against the notice period. However, your organization has considered all types of leave to adjust the notice period. In lieu of working, you have adjusted the balance leave. Therefore, you have to pay salary based on his actual physical working days only, i.e., 16 days only.

Ms. Priya - I have clarified your query as well.

Regards,
S. Rajasekaran

In a normal case in a manufacturing company, after submitting a resignation, an employee typically has to work for one month or adjust their leave during the notice period. Since the candidate has already completed 16 days and is requesting to adjust their leave during the notice period, you may adjust 14 days of leave with full salary. It's important to note that only PL/EL (Paid Leave/Earned Leave) can be adjusted during the notice period. CL/SL (Casual Leave/Sick Leave) automatically expire in such situations. Please refer to the leave policy of your company, if available.

Please let me know if further assistance is needed.

Thanks & regards,
U S Rauthan

If the notice period of the employee ends on the 16th, then there is no need to pay the salary for the entire month. At the same time, leave encashment for 14 days has to be provided to him. If he takes leave during the notice period, the leave will be deducted from his leave balance.

Regarding Leave Encashment

Please cross-check the leave policy of your company.

Regards,
Rahul

I was in confusion because our company doesn't have a written policy. So presently, I am preparing an HR/Admin Policy. These are cases I faced last month. Also, this candidate was not in a situation to listen to me. I convinced him, but he was saying he would file a complaint against the company because the previous company didn't even issue an offer letter or appointment letter. Now, I am completing all these formalities along with the HR policy.

Once again, thanks to all.

Regards,
Ashok