Confused About Leave Encashment Rules After Resignation? Need Your Advice!

Hello Experts,

I am working in a software company in Gujarat. I signed an NDA at the time of joining, which mentions that the employee cannot leave the company for a period of 6 months from salary revision/appraisal. In case the employee has to leave the company before the cessation of the notified period, the incremented amount will be adjusted from the full and final settlement.

It is not clearly mentioned whether the 6 months of duration after salary revision include or exclude the notice period. I have resigned within 6 months after salary revision and have to serve a 2-month notice period. Including the 2 months of the notice period, I am leaving the company after 6 months of the salary revision.

Now HR is informing me that the company will not pay leave encashment as I have breached the NDA. The company has the right to change rules of leave encashment anytime, so they will not pay me leave encashment. I believe I am not breaching the NDA since I am leaving the company after 6 months of the salary revision.

My query is:

Can the company stop or restrict the leave encashment? Does the company have the right to change rules of leave encashment anytime? Please provide me with your valuable inputs on this.

Kindly suggest.

Understanding Employment Conditions and NDAs

There is no mention of the capacity of your employment—whether as a workman or otherwise. That aside, it sounds very odd to me that any condition restricting an employee's exit through formal resignation within a certain period after a pay hike could form part of an "NDA," which is enforceable only upon registration under the Registration Act, 1908.

Secondly, the act of exiting through formal resignation is covered by the conditions of notice and acceptance of resignation by the employer. Therefore, the condition that no exit is allowed within 6 months from the date of a periodical salary hike would be totally unreasonable, as the hike is normally based on past performance only.

Thirdly, since the resignation mentioned in the post is a prospective one, taking effect from a future date only after the six-month period from the pay hike and the expiry of the two-month notice period, there is no breach of the contract of employment.

Finally, and even otherwise, the encashment of leave upon formal exit is a matter governed by the leave regulations of the organization or the applicable labor law, depending on the employment status of the outgoing employee. In any case, no instantaneous modification of the rule according to the whims and fancies of the employer is permissible under law.

Therefore, the statement of the HR person is totally incorrect, and the refusal of leave encashment on the basis of a breach of the so-called "NDA" is totally illegal.