Understanding Leave Encashment: What Are the Rules and Limits for PL/EL?

Hello Friends,

Please clarify the following:

1) Is there any particular rule or policy regarding the encashment of PL or EL?

2) How many leaves can be accumulated and carried forward for the next year?

3) How many days can be encashed at a time?

Regards,
Priya

Dear Priya,

As per Rule 15, minimum Earned Leave (EL) should be given to every person. However, if the company wishes, it can be enhanced. This depends on the company policy. Any person is entitled to EL after one year of employment. The calculation for EL is based on the formula (Last year's working days / 20), but a minimum of 240 working days is required for EL to be applicable. If a person has a balance of EL from the previous year, the remaining leaves will be carried forward to the next year. In the event that a person has a balance of leave and resigns, the company should compensate for the remaining leaves.

Thanks & Regards,
Raj

Hi Raj,

Thanks. I have two doubts:

1. If a person has been working for more than 3 years in a company and hasn't taken any leave since the date of joining, how many leaves will be carried forward to the next year? For example, in our company, every employee will receive 12 days in their Leave account once every six months.

2. If an employee resigns from the company within one year but completes six months, will the 12 days of earned leave in his leave account be paid out to him or not?

I need help with this.

Regards,
Deborah
9884229630

Dear Deborah,

As per the Factory Act, if any employee doesn't take earned leave (EL), the maximum EL will be 30, but it also depends on the company policy. I have noticed that some company employees have 130 EL. However, according to the Factory Act, the minimum is 15 and the maximum is 30 EL. You can discuss with management, and if management agrees, you can carry forward more than 30 leaves.

You did not clarify whether the 12 leaves in six months are all EL or the total of EL, SL, and CL. Please clarify. If a person resigns within one year in that position, the company will pay for all EL. I believe you have received your answer. If you have any queries, please feel free to ask.

Regards,
Raj

Encashment and carry forward of leave are provided in the Factories Act, applicable to factories. Other organizations not covered under the same may define their own rules.

Dear Priya,

If your company is covered under the Factory Act, please refer to Chapter VIII of the Factory Act for Leave Rules. However, for every 240 days worked, your eligibility for Earned Leave (EL) starts.

The accumulation of leave depends on Company Policy.

Encashment of leave is made based on the basic earnings of an employee.

Regards,
Zakir Malik