Leave Encashment on Resignation: What Does the Law Say for Shop and Establishment Act?

Dear Seniors,

Greetings. I have a query regarding Leave Encashment. I want to know if there is any law under labor law for encashment of leave in case of separation (resignation)? My company is registered under the Shop and Establishment Act.

Thank you,
Gaurav

Bombay Shop & Establishment Act

Chapter: Leave with Pay and Payment of Wages

Section 36: Pay during leave

Every employee shall be paid for the period of his leave at a rate equivalent to the daily average of his wages for the days on which he actually worked during the preceding three months, exclusive of any earnings in respect of overtime.

Dear Gaurav,

It is not clear where you are employed - in the U.S.A or in India. As far as any establishment-specific Indian Labor Law is concerned, the monetary value of the unavailed portion of earned leave/leave with wages/privilege leave standing at the credit of the employee's leave account should be calculated on the basis of his last drawn salary and paid to him at the time of termination of his employment irrespective of its nature.

Dear Gaurav,

Please review in detail the relevant Shops & Commercial Establishments Act under which your company is registered. Any balance of PL/EL in credit is eligible for leave encashment consequent to resignation from service.

Thank you.