How Should Excess Casual Sick Leave Be Handled in Final Settlements? Seeking Advice

Leave Settlement Query

Employees are entitled to 15 days of Casual cum Sick Leave in a calendar year. However, if any employee availed the entire leave in the first 2 months of the calendar year and left the organization, which formula would be appropriate for the following actions during the full and final settlement:

1) Adjust the excess availed leave from his earned leave, i.e., Privilege Leave, or

2) After considering his pro-rata leave eligibility, the remaining excess availed leave needs to be considered as a Loss of Pay (LOP), which can be deducted from the monthly gross salary during the full and final settlement.

Seeking your views.

Regards, Avinash

Employees are eligible to avail 15 leaves (CL & SL) for a period of 12 months. If any employee avails more than their eligibility, the organization has every right to deduct the amount to the extent of the excess leaves availed. The deduction is equivalent to the amount paid in case the employee avails leave while they are on the rolls.

Policy Variations Across Organizations

This policy differs from organization to organization. In some organizations, they will adjust against the EL, while in others, they will deduct. It totally depends on their leave rules, policy, or practice.

Regards,
Kameswararao

Casual leave may be adjusted with the available earned leaves, but not sick leave. It is not necessary for anyone to fall sick in a particular period or for sick leave to be spread out throughout the year. It may occur anytime, and so that cannot be adjusted. Casual leave can be taken on a pro-rata basis, and any excess can be adjusted with the leaves. If they are not available, you may treat it as Loss of Pay (LoP). You may need to check the purpose of the leave when availed to ensure that you are on the right path.

Leave Adjustment and Recovery

Any leave is proportionate, whether Casual Leave (CL), Sick Leave (SL), or Privilege Leave (PL), and you have every right to deduct the excess paid leaves. Now the question is whether to treat the same as Loss of Pay (LOP). The answer is no because you might have paid the employer's contribution to PF/ESI, etc., which may not be possible for you to recover or adjust in respective accounts.

Adjustment of Sick Leave from Privilege Leave

Regarding the adjustment of sick leave from his PL, you can do it provided he makes a written application along with a medical certificate to adjust the same against his due PL. If you are in a position to recover the employer's contribution to PF & ESI that you paid to respective authorities, you may recover from his Full and Final (F&F) settlement by showing his CL/SL as LOP and pay him the full amount of his balance PL encashment due to him.

The choice is yours and your company policy. You will not be doing any injustice to the employee by recovering the excess paid amount on his behalf.

Regards,
Suresh