Can Unused Sick Leave Be Used to Offset Notice Pay? Seeking Legal Insights

As per HR policy, PL will be encashed. SL can be accumulated up to 90 days but will not be encashed upon leaving the company. Our leave policy is silent about the adjustment of leaves against notice pay. An employee has sufficient PL and SL balance to adjust his notice pay. Is there any law for the adjustment of uncashable leave (SL) against his notice pay?

There is no law or enactments for the adjustment of accumulated sick leave against notice pay. If anything should be done, it should be under the policy of the company!

Termination and Notice Period Adjustment

In general terms, either party can terminate by giving notice or, in lieu of notice, payment of an equivalent amount to the notice period. This is the discrete power of the management to decide whether to pay against the accumulated earned leave or to adjust it against the notice period, if the earned leave is sufficient to meet the requirement.

As per your company rules, the SL (Sick Leave) is not being encashed, so it cannot be adjusted or does not have cash value. Further, your leave policy is silent about the adjustment of leaves against notice pay. It is better to ask the employee to render the Notice Period. At settlement time, you can pay his balance earned leave, but SL will lapse.

Thank you.