Leave Encashment After Resignation: How Does It Work with 180 Days Balance?

Please clarify the leave encashment rule after resignation or termination from a Limited company. The leave balance is 180 days in 9 years on the job.

Hi Buddy,

An employee can encash his/her Outstanding Earned Leave (EL) at the time of resignation or termination. However, the Factories Act specifies that an employee cannot accumulate more than 30 days of EL.

If the company policy allows an employee to accumulate more than what is stated in the act, then you may be eligible to encash the outstanding leave in your account when leaving the company.

With Regards,

Mr. Thumbs Up

Dear, leave encashment is provided to employees only if there are accumulated PL/EL in their leave account. Permissible leave encashment shall be governed by the policy of your company. Most companies don't allow the accumulation of leaves for more than 3 years. If it exceeds 3 years, either the excess leaves may get lapsed automatically or may be encashed on your request. However, it varies from company to company. Encashment is calculated based on the average salary of the last 10 months. Here, salary means Basic + DA + any commission as a % of turnover.

Please note, leave encashment will be settled with the full and final amount and is taxable in case of resignation and non-taxable in case of retirement/superannuation.

Regards.

My company (Simplex Infrastructures Limited) refuses to encash credited privilege leave after resignation as it is a construction company.

Dear Chhetry,

Please go through the following links for some related information: https://www.citehr.com/107968-leave-...r-act-pg3.html. I'm not sure whether yours is a construction company. Which act applies to you? Are you registered under the Factories Act or the Contract Labour (CA) Act? If you are working at a site, please find out which act is applicable for such works in Odisha. You have to provide relevant information about your company so that we can guide you on this.

There is no rule for leave encashment in the Factory Act. You may also refer to the Industrial Act of 1947, Section 25-C & E of Sec-80. There is no provision to pay in cash for your leave, but you may cash it out according to your company policy, whether it is divided by 26 or 30.