Is Leave Encashment Mandatory by Law, or Can We Encourage Employees to Use Their Leave?

Can anyone confirm if there is any law or rule wherein leave encashment is mandatory? Can't we encourage employees to take leave, or will it lapse? Also, is the number of leave accumulations as per law or company procedure?

For example, if we give employees the option to accumulate leave up to 45 days, after which the acquired leave would lapse in the respective year if not utilized. This 45 days' leave would only be encashed at the time of F&F settlement at basic pay.

Please share your inputs as per the prevalent rules in Delhi.

Thanks

As per the Delhi Shop and Establishment Act applicable in Delhi, a maximum of 45 days of earned leave can be accumulated for encashment. Encashment is to be done at the time of full and final settlement, i.e., at the time of leaving the organization.

For more information, you can refer to the official website: http://www.delhi.gov.in/wps/wcm/connect/doit_labour/Labour/Home/Acts+Implemented/Details+of+the+Acts+Implemented/The+Delhi+Shops+Act,+1954/

Dear all,

Only earned leaves are encashed, and that too at the time of resigning or superannuation. During the continuation of employment, it is not mandatory to encash leaves.

P K Sharma

It's a well-known fact that leave rules are generally not common across all establishments. This is one area where almost every establishment differs from each other, except central government offices that follow their FR/SR/CCS (Leave) Rules. The nature/types of leave, the number of days of leave in each category, maximum days that could be accumulated, and rules for encashment are also not commonly followed. This is mainly due to the applicability of Acts under which these establishments are established, like the Factories Act, Shops & Commercial Establishments Act, Societies & Clubs, Educational Institutions, etc.

Leave Encashment

What is uniformly followed is regarding leave encashment. While the lapse of leave accumulated over and above the maximum limit is strictly enforced when leave at credit overflows, the same is not the case for encashment, which is discretionary on the part of the employer except in the case of full and final settlement. So, if there is an enabling provision in the respective leave rule, one cannot claim it as a right to encash.

The query was pertaining to Delhi State, so I had given a specific answer.

Hi all,

As I'm new to HR, can anyone please confirm for me whether encashment of leave as per the AP Shops and Establishment Act for the service sector (private company) is mandatory or if it depends on company policies? In this case, if the company does not include it in their policy, is that against the law or is it at the employer's discretion?

Please do the needful.

Thanks and regards,
Swapna