Can We Encash 45 Privilege Leaves Under the Shops and Establishment Act?

We have accumulated 45 privilege leaves for our employees. Now, we want to encash all the privilege leave. Is it possible as per the Shops and Establishment Act and Factories Act?

I have no idea as to which state's Shops & Estt Act applies to your establishment. However, I am sure that annual encashment of Privilege Leave or Leave with Wages in lieu of avail has not been provided for either in the State's Shops & Estt. Act (other than Tamil Nadu - I am not sure) or the Factories Act, 1948 except in the event of termination of the employee's services. Moreover, the maximum number of days of such leave that can be accumulated is limited to 24 in the former (in Tamil Nadu) and 30 in the latter. However, by virtue of the operation of the provisions of Sec.78 of the Factories Act, better terms in this regard under any other law or award, settlement, or contract of employment are permissible. Periodical or annual encashment of such leave can be considered more beneficial to both the employer and the employees. It is advisable to arrive at a bilateral settlement in this regard under Section 18(1) of the Industrial Disputes Act, 1947.

Regards

First of all, let us know whether your company comes under the Factories Act or the Shops & Establishment Act. Please specify the state in which your company is located so that we can provide our views.

We are in Gujarat and have two different locations - one governed by the Factory Act, 1948, and the other in Ahmedabad Shops & Establishment.

Leave Encashment Under the Bombay Shops and Establishment Act

As per the Bombay Shops and Establishment Act of 1948, employees can have their leave encashed at the time of retirement or resigning from the job, based on the accumulated leave as outlined in Section 35.

Mr. Umakanthan mentioned that there is no provision for encashment written in the Factories Act.

Can anyone help me determine if an employee who completed 240 days of service (joined on 01 Jan, with the last working day on 31 Oct) is entitled to Privilege Leave (PL)?

Regards,
Ridesh