Resignation Dilemma: Does Completing a Year During Notice Make Him Eligible for LTC?

One of our officers has resigned just before completing one year of his service and is currently serving the notice period. During this notice period, he has completed one year of service. Is he eligible to get LTC?

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I think that the objective of any LTC Scheme for employees is to encourage them to enjoy their leave on vacation with their families by visiting places of recreational or rejuvenating importance while they are in service. Therefore, it becomes imperative that the leave should be actually utilized for the purpose of such tours. If an employee does not utilize the LTC pertaining to any year/block during his service but resigns later, he is not at any loss as he is going to get encashment of the unavailed leave at his credit as a terminal benefit.

So my opinion is that he cannot claim the expense of a tour without undertaking it. If the Scheme of LTC of the organization permits such an option, no problem.

LTA in Private and Public Sectors

In the majority of private companies, LTC or LTA is a component of remuneration. The gross amount agreed with the employee would be divided into basic salary, HRA, other allowances, LTA, etc. In such cases, the LTA becomes payable as a taxable allowance.

However, in the public sector and government services, LTA or LTC, as the case may be, is a concession or allowance that is paid over and above the salary. In such cases, obviously, a resigned employee who has not completed the prescribed service, say 12 months, will not be eligible for LTA.

But when it comes to a situation where the LTA is a component of salary or remuneration (often described as CTC by new-gen HRs), I feel it should be paid as an allowance if he does not undertake the tour.