Understanding Earned Leave: How Many Can You Take and How Is Encashment Calculated?

Earned Leave/Privilege Leave Policy

This is about Earned Leave/PL. After the completion of 240 days, employees will receive 16 PLs as per our company's leave policy. If an employee wishes to apply for leave, can they use Earned Leave (EL)? How many Earned Leaves (EL)/Privilege Leaves can they avail themselves of at a time in a month?

Encashment of Earned Leave

Encashment of EL is done on what basis? Is it encashed based on Basic pay or Net Pay? If encashment is based on Net pay/Basic, how is it calculated (Current year pay)?

Please share your knowledge.

Thanks,
Aneetha

Earned Leave (EL) Application

1) If an employee wants to apply for leave, can he/she use Earned Leave (EL)?
Ans: Yes, any employee who is eligible for EL/PL can avail of those benefits.

Limits on Earned Leaves (EL) Usage

2) How many Earned Leaves (EL)/Privilege Leaves can be availed to take leave at a time in a month?
Ans: There is no limit for EL. Only CL has a limit of a maximum of 2 days in a row. All the eligible EL/PL shall be availed in one go.

Encashment of Earned Leave (EL)

3) Encashment of EL is done on what basis? Is it encashed on Basic pay/Net Pay?
Ans: Encashment of EL is done based on the available balance of leaves. EL encashment shall be based on the Basic wages or on the gross wages. Once again, it depends on the company policy.

Calculation of Encashment

4) If encashment is on Net pay/Basic, how is it calculated (Current year pay)?
Ans: If any EL is not encashed, then the same shall be carried forward to the next calendar year. Once again, a clear policy should be framed, and the same shall be followed by all the employees.

Hope your doubts are clear.

Regards,

As mentioned by Jeevarathanam, if you have a leave policy, the entire query of yours will be answered within the policy itself.

Condition in the Factories Act

There is a small condition in the Factories Act that states it should not be used more than three times a year. Of course, normally we may not insist on it. You may have your policy defining the number of times, leave accumulation (Factories Act allows 30 days), rules of encashment, etc. At all times, please ensure that it is not inconsistent with statutory provisions.