Can Companies Legally Deduct Earned Leave? Seeking Clarity on Leave Policies

Hi all,

Greetings of the day!

I am posting my own case here. Kindly let me know if it is possible for any company to make deductions of EL/PL as per the law or not.

I had 21 EL days in my leave account, but on 15th April (New financial year), I noticed there were only 10 days remaining.

Upon inquiry, I was informed that according to company policy, only a maximum of 10 PL/EL days will be carried forward to the next year, and the remaining days will lapse. Additionally, during the Full and Final settlement, only 8 PL days will be encashed, not more than that.

Thanks and Regards

Leave Policies and Legal Considerations

As per leave rules, it is clear that "Leave is a privilege, not a right." Hence, every company has its own leave policy. On the other hand, the Payment of Wages Act states that no deductions can be made from earnings except for legal deductions.

Earned Leave (EL) Entitlement

Regarding Earned Leave (EL), an employee is entitled to earn 1 EL for every 20 days of work. It is acceptable that 10 EL will be transferred, but EL cannot lapse; the balance EL needs to be encashed by the management. Leave records, including Form 24 and encashment details, must be maintained.

Regards, Soniya Bhardwaj AM HR UDTL