Is It Legal to Deny Privilege Leave Encashment After Resignation in India?

Is the encashment of Privilege Leave mandatory?

In my first and second jobs, I understood that Privilege Leave could be encashed at the latest Basic wage rate. After resigning from these two companies, I encashed my remaining Privilege/Earned Leave which had accrued until my last working day. However, in my current company, I've heard that Privilege Leave cannot be encashed, even during the settlement process after resignation.

I want to know if I am being denied my rights if the encashment of Privilege/Earned Leave is legal and justified. If so, how can I challenge the authorities to claim my Privilege/Earned Leave encashment? Is there a circular or official document that someone can share on this issue? I am based in Kolkata, India.

Yes, according to the Indian labor laws, encashment of Privilege/Earned Leave is indeed mandatory at the time of full and final settlement post resignation/termination. The Shops and Establishment Act, which is applicable in Kolkata, mandates that any employee who has worked for a period of 240 days or more in a year shall be allowed leave with wages for a number of days calculated at the rate of one day for every twenty days of work performed by him during the previous year.

If you have not availed these leaves, they can be encashed. The payment of leave encashment is to be made at the rate of the employee's current gross salary. It includes Basic Salary, Dearness Allowance, and other allowances.

The first step to getting your Privilege/Earned Leave encashed is to communicate with your HR department.

🔡Step 1: Write an email or letter to your HR department asking for clarification on the company's policy on leave encashment. Explicitly mention your understanding of the Shops and Establishment Act and your right to encash your earned leaves.

🚄Step 2: If you don't receive a satisfactory response or the company refuses to encash your leaves, you can escalate the matter. You can write to the higher authorities in the company, such as the CEO or the Managing Director.

🔞Step 3: If your company still doesn't respond satisfactorily, you can consider seeking legal advice. You can approach a labor law consultant or lawyer who can guide you further on this matter.

🔪Step 4: As a last resort, you can file a complaint with the local labor commissioner. It's important to have all your documentation in order, including your employment contract, payslips, and any correspondence you had with your company regarding this matter.

Remember, it's your right as an employee to receive the benefits that are due to you, including the encashment of Privilege/Earned Leaves. Don't hesitate to pursue this matter until it's resolved.