Can My Ex-Employee Demand PL Encashment After Leaving? Seeking Legal Insights

Dear Team, One of my employees is demanding PL encashment after completing 1 year since his relieving from the company. As per our company policy, an employee cannot encash their balance PL under any circumstances, nor can they use it against their notice period. Now, he is threatening me with labor law.

Mandatory PL Encashment for Managerial Employees

I want to know if it is mandatory to encash PL for managerial level employees as per the Factory Act or Shop and Establishment Act. If so, please specify the section and act. My head office is in Mumbai. Please help.

Thanks & Regards, HRD.

Final Settlement for Resigning Employees

Any employee resigning or terminating their employment must be settled with final dues and properly sent off from the company. If this does not happen, these issues can arise later, which are both painful and time-consuming.

Moreover, as you stated that the company policy does not allow encashment, this should be reviewed, as the full and final settlement should include all dues.

Labour Court Challenges

As far as I am informed, a managerial person cannot challenge the company on these grounds at the Labour Court. Labour courts are appropriate forums for the workmen category.

Dear HRD@BSTE, as an employer, you are not in a position to categorically state whether you are registered under The Factories Act/Shops & Commercial Establishments Act. Please peruse the relevant Acts in detail. Your company policy is not in conformity with The Factories Act/Shops & Commercial Establishments Act. Relevant laws will prevail over your policy.

Leave and Leave Encashment

The Factories Act/Shops & Commercial Establishments Act provide for leave/leave encashment to all employees of the organization. Even managerial personnel are entitled to the benefits provided under the relevant laws.

Appropriate Forum for Adjudication

Department of Labour/The Factories & Boilers Department - Appropriate forum for adjudication of non-payment of leave encashment.

As per relevant laws, leave encashment is payable for balance leave at credit consequent to resignation from service.

Dear Sir,

Is there any time limit after resignation for raising this kind of issue?

Thank you.

It is better for HR to clear off the employee's dues who has resigned.

All the statutory enactments are in favor of the weaker section and shall not support managements, which are the stronger segments in business/employee employer relation.

Regarding time limits, all are governed by Contract Acts & Labour Enactments.