Understanding Your Rights: How to Claim Dues and Leave Encashment After Mass Termination in Mumbai

My husband, who is working in Mumbai as a manager, is being terminated by the company as they are restructuring. The company has issued termination letters to most of the employees with a one-month notice period as per the appointment letter. In the settlement, the company is paying salary, bonus, LTA, and encashing PL/earned leave of 21 days, as opposed to the balance leave of 32 days.

Entitlement to Earned Leave Encashment

Am I entitled to claim earned leave encashment for the remaining 32 days? Please let me know under which Act this can be claimed.

Retrenchment Compensation and Dues

I also noticed that the company is paying retrenchment compensation to a select few. Could you please inform me about all the dues that can be claimed from the employer, considering this mass termination of employees? Additionally, please provide information on the relevant Acts/Laws.

Thank you,

Regards,
Robert

It is not clear from the facts whether your husband was covered under the definition of a workman under the ID Act. For those who are covered as workmen, the management ought to have given notice to the workmen under Section 9A of the ID Act; otherwise, it is considered void retrenchment. Refer to the Loksatta News Papers Ltd. case of 1999. Further compliance with retrenchment compensation has to be followed for all workmen, apart from the provision of "last come, first go." If your husband is not covered as a workman, then under Section 38B of the Bombay Shops and Establishment Act, the provisions of the Industrial Employment Standing Orders are applicable if there are 50 or more employees. By virtue of it, simple termination without notice is not sufficient.

Thanks,
Sushil

Dear Sir, Co. has more than 50 employees, and my husband has put in more than 4 years of service. The company is encashing PL/earned leave of 21 days against the balance leave of 32 days. Am I entitled to claim earned leave encashment for the full 32 days? Please let me know under which Act this can be claimed.

Regards,
Robert

Since he is working in Mumbai, resort to provisions under the Bombay Shops and Establishment Act read with the Industrial Employment Standing Orders Act to obtain a stay against termination if no show-cause notice has been given. Furthermore, workmen of the company can also obtain a stay from the labor court against the restructuring leading to retrenchment if no notice under section 9A of the ID Act has been given and no settlement under the ID Act was entered into. The EL issue is a minor one. It can be claimed under the Bombay Shops and Establishment Act and rules. Other benefits under the said Establishment Act are undeniable.

Thanks,
Sushil

It is better not to accept the earned leave encashment if you are disputing the validity of termination. Otherwise, under the Bombay Shops and Establishment Act, a maximum of 42 days of earned leave can be accumulated and can be encashed at the time of discharge.

Thanks,

Sushil

Calculation of Earned Leave under Relevant Acts

In terms of Sections 35, 36, and Section 2 of the Bombay Shops and Establishment Act, read with Section 2 of the Payment of Wages Act, wages are calculated for earned leave. The formula of one LD Contributor, Mr. Manish Modi, may be referred to in a thread "Leaves Granted" of Citeops in this regard.

Thanks,

Sushil

In the above-mentioned matter, I want to point out that you should check your company's standing order/company policy regarding the leave encashment rules. It is possible that the company has the right to encash only 21 EL because, as per the Factories Act 1948, more than 30 EL cannot be encashed.