How Can HR Admins in India Manage and Convert Privilege Leave to Cash?

Currently, I am working with an IT company as an HR Admin. The company provides "Casual Leave" and "Privilege Leave." Kindly advise on how to carry forward Privilege Leave and whether there is a possibility to convert this leave into cash. If conversion is feasible, please specify the number of leaves that can be converted and the corresponding monetary value for each Privilege Leave.

Thank you.

Thank you for providing such valuable information. If an employee is leaving the organization after two years of joining, how can I calculate their paid leave (PL)? Is there a possibility to convert those accumulated leaves into cash?

I look forward to your guidance on this matter.

Best regards,

Accumulated Privilege Leave or Earned Leave

Accumulated Privilege Leave (PL) or Earned Leave (EL) need not lapse. There are no laws that mandate this. EL or PL can always be converted to cash or encashed. However, there may be some restrictions, such as encashment being allowed only once a year or up to a month's leave at a time.

Fair Leave Policies

Any rules or policies related to leave should not be framed in a way that exploits the employee and puts the employer at an advantage every time. Rather, they should be fair and employee-friendly.

Warm regards.

There is a rule for PL. As per the Shops and Establishment Act, the eligibility for PL is 21 days, which will be earned quarterly, i.e., the first 3 quarters 5 days and the last 6 days. It can be accumulated up to 42 PL, i.e., 2 years. The employee has to work 240 days in a year to get the full 21 days of PL. If an employee has earned more than 42 days of PL, the remaining PL can be encashed (Y = X - 42) using the formula ((Basic + DA)/25). If the employee leaves the company, you have to encash the full earned leave. For further details, you can refer to the Shops and Establishment Act/Factory Act.

HR Policy Compliance

The HR policy should be beneficial to employees and should comply with labor laws. You cannot frame the HR policy as you wish. The policy should cover all rules and benefits prescribed by labor laws, which will help avoid any industrial disputes.

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Regards,
Renjini