Can I Get Paid for Unused Leave When Resigning from a Small Company?

I have worked at a company for 7 months starting in October 2017 and have given my notice period of 30 days (last working day in June). However, all my paid leaves are pending to be taken (given at 20 per year). My employer has refused to give any compensation for the balance leaves or allowed me to take leaves during my notice period. His argument is that the leaves are for those completing a year at the company and are not provided on a pro-rata basis, and leave encashment isn't a standard procedure.

Upon looking online, I found that leave encashment is a provision under the Bombay Shops and Establishment Act. However, I also found out that a company with less than 10 employees isn't required to register under the act, and I suspect that's the reason my employer isn't willing to pay out the balance leaves. Is there any other legal provision for my leave encashment?

PS: Mine is a software company registered under the Companies Act in 2009.

Under the Bombay Shops and Establishments Act, 1948, leave provisions typically include provisions for leave encashment. However, the applicability of these provisions depends on whether the establishment is covered under this Act.

Here are some key points to consider regarding leave encashment under the Bombay Shops and Establishments Act and other related legal provisions:

1. Applicability of the Act: The Bombay Shops and Establishments Act, 1948 applies to establishments such as shops, commercial establishments, and residential hotels in the state of Maharashtra. It generally covers establishments with 10 or more employees. Since your employer is a software company registered under the Companies Act, it's likely your employment should fall under this Act if it has more than 10 employees.

2. Leave Entitlement: According to the Act, employees are entitled to a certain number of leave days based on their length of service. Leave is typically earned progressively during the year and can be taken after completion of a certain period of service. Normally, an employee can take leave after completing 240 days of continuous service within a calendar year.

3. Leave Encashment: Leave encashment refers to the practice of paying employees for unused leave days upon termination or resignation. If an employee has unused leave at the time of resignation, the employer may be required to compensate the employee for these days based on the daily wage rate.

4. Pro-rata Entitlement: The Act generally provides for leave entitlement on a pro-rata basis. This means that if an employee has completed a certain portion of a year (e.g., 7 months as in your case), they are entitled to a proportionate amount of leave.

5. Company Policy: While the Act provides a framework, actual leave policies, including leave encashment, can vary based on company policies. Companies may have their own rules regarding leave accrual, utilization, and encashment, which may sometimes be more favorable than statutory requirements.

6. Legal Recourse: If your employer is refusing to pay for the balance of unused leaves and you believe it contravenes the Act or your employment contract, you may consider taking legal advice or approaching the labor authorities for guidance. They can help determine if your employer is obligated to compensate you for the balance of unused leaves as per the statutory requirements.

Given these points, while the Bombay Shops and Establishments Act does provide for leave encashment, the specific application in your case may depend on the number of employees and the company's registration status under this Act. It's advisable to review your employment contract, company policies, and seek legal advice if necessary to understand your entitlements and rights regarding leave encashment.