Is It Legal for Companies to Wipe Out Earned Leave Balances Each Year? Seeking Advice!

Hi all, my company doesn't transfer the earned leave balance to the next year, nor is encashment available. Please guide me on whether this practice is illegal according to the company's shop and establishment act. Can we take any action against this rule, or does the employer have the capacity to not transfer the leaves to the next year? Please advise; otherwise, December is about to end, and all leave balances will be zero.

According to the Act, you have to manage the EL account with the minimum limit, i.e., 30. Above this limit, the company has the right to lapse the leave. Advise the company to maintain the minimum limit of EL and also inform them not to maintain the account with zero.

Regards,
Kiran Arya
[Phone Number Removed For Privacy Reasons]

Leave Carry Forward Under The Factory Act, 1948

Under subsection 2 of Section 79 of The Factory Act, 1948, the number of days of leave that may be carried forward to a succeeding year shall not exceed thirty in the case of an adult or forty in the case of a child.

Regards,
Bhadauria

There is no legal provision for encashing leave accrued to a serving employee. Provision exists in the Factories Act 1948 (Section 79{3}) only after the termination of service. Indeed, the encashment of leave for a serving employee is a voluntary provision used to allow encashment of leave in case the firm is unable to permit the employee to avail of the leave. So, where the firm refuses leave, the employee shall have the option to encash the leave, at least what overflows beyond the limit. But let me make it clear, looking at the stress and strain of work, a prudent policy would be to allow employees to avail of the leave to provide the much-needed rest rather than encash the same.

Regards,
KK

Leave Entitlement and Compliance

Carrying forward the Earned Leave to the next year cannot be enforced on a company. Please note that the concept of leave as an entitlement is based on the premise that everyone requires a break from the normal routine, partly to refresh and sometimes to meet personal needs.

Therefore, organizations that do not permit leave encashment must ensure that denial of authorized leave to an employee is against the norms of compliance.

Hi Seniors, I am an HR professional in a manufacturing unit in Uttarakhand. I want to implement a Leave System in my unit. Please provide me with information on the Legal Leave System so that I can discuss this issue with my management.

Thanks and Regards,
Jagdish Rawat

Both the Factories Act and the Shops and Establishments Act provide for carrying forward unavailed earned leave subject to the limit prescribed under the respective Acts. However, there is no provision for encashment of leave during the service of an employee, only at the time of termination.

Regards,
B. Saikumar
Mumbai