Is It Legal for My Former Employer to Withhold Leave Encashment After a Year?

Hi all, I was working in a private technology solutions company for 2 years and 1 month. I got another job, so I mutually agreed with my boss to leave my current job for the new one. I didn't submit a formal resignation, but I informed my boss about my decision to leave, and he agreed. Initially, my boss mentioned that my accrued leaves would be encashed upon my departure from the company. However, it has been a year now, and he has not followed through on that promise. Instead, he now says he is consulting a lawyer regarding the matter.

Uncertainty About Leave Policy

I am uncertain about the company's leave policy. Is it possible for a company to have no leave policy at all?

I would appreciate any advice or insights on how to proceed in this situation.

Thanks,
Priya Selvaraj.

Even if the company has a separate leave policy, it should not be inferior to that of the leaves under the state Shops and Commercial Establishments Act (hope your establishment was a commercial establishment and not a factory, mine, or plantation) which governs the service conditions, including leaves of employees working therein. The Act is very clear about the encashment of leave for an employee who left service, and accordingly, you are eligible for the same. I don't know why your previous company boss is waiting for a legal opinion to come in this matter.

Regards,
Madhu.T.K

First of all, you are supposed to tender your resignation for your post at your previous employer. Merely telling your boss orally may not be sufficient to prove that you have resigned. Any unavailed earned leaves, if applicable, credited to an employee who resigns or retires will be paid by the employer. In the absence of the above two conditions, how should we treat your absence from duty at your old employer's office?

Hence, you are advised to settle this issue first and request your final settlement of accounts from your previous employer after obtaining written acceptance of your resignation.

Regards

Hi Mr. Madhu & NV Rao, Thanks for your replies. Let me tell you briefly about my company. It's an outsourcing company that specializes in technology solutions, so it's a commercial concern. We were fewer than 10 members in our company, so we didn't have PF or ESI. Am I still eligible to ask for leave encashment? There is no mention of leave encashment in my offer letter. Please help.

Thanks,
Priya Selvaraj.

Entitlement to Leave Encashment Under State Shops and Commercial Establishments Act

A commercial establishment is expected to follow the provisions of the State Shops and Commercial Establishments Act. For entitlement to leave and encashment of unavailed leave at the time the employee leaves, there is no condition with regard to the number of employees in the establishment. Therefore, you are eligible to get the leave encashed.

Regards,
Madhu.T.K

Going by her statement, she served in an unorganized company which may not have any systems. How could an employee be allowed to leave without proper exit procedures? Do you have an appointment letter? Was there an attendance system? How do you know if you have accumulated leaves? How were you paid - by cheque, cash, or direct bank transfer?

Pon

I think leave encashment is not a statutory benefit. In some companies, unavailed leaves get lapsed. Please check with your company's leave policy.

Regards,