Curious About Casual Leave Encashment? Seeking Insights on Policies and Laws

Hello, I work in a software organization with over 3 lakh employees. In our organization, they are planning to encash casual leave at the end of every year. Is there any policy or law regarding this? I just want to know the purpose.

Thanks & Regards,
Mani

Hi Buddy,

According to my knowledge, there is no provision in the Factories Act and the TN Shops and Establishment Act specifying the encashment of CL. If a company or organization's leave policy is framed to facilitate the encashment, then they can do so.

With Regards,

Mr. Thumbs Up

Yes, there is no law for leave encashment. Some organizations do give leave encashment, and some don't. My prior company used to provide it, but the present one does not have any such policy. Therefore, it varies depending on each company's leave policy.

The Implications of Casual Leave Encashment

Even though there is no restriction on the encashment of casual leave, such a facility based on individual corporate policy may seem beneficial. However, in the long run, it can counteract the welfare philosophy underlying the grant of casual leave. The very name "Casual Leave" suggests that it is meant to enable paid employees to fulfill their personal or social obligations arising from unforeseen or contingent circumstances.

Particularly in the IT and ITES sectors, obtaining casual leave is not so easy. If it is traded for money at the end of the year, it cannot be conceived as a goodwill measure to increase employees' earnings due to its annual lapse. On the contrary, it can be viewed as a subtle move to decline it at times of necessity.

Employee casual leave encashment should require both the employer and employee to contribute their share towards the PF amount.