Leave encashment - we do not have any clause for leave encashment in our employment terms

Hi, we are a company registered in the shop & establishment. We do not have any clause for leave encashment in our employment terms. Kindly let me know:

1) Is it legal, or
2) Does the company have to bear the leave encashment liability?

Regards,
Chumki

Dear Chumki,

As per the labor laws, every salaried person is entitled to a minimum number of PL every year. Such accumulated leaves can be encashed during the continuation of service or at the time of retirement, resignation, or termination. The employer cannot deny leave encashment, and it is illegal.

For leave encashment matters, unless otherwise provided in the policy, you have to refer to your state's Shops and Commercial Establishments Act. Generally, leave encashment at the time of discharge or termination of employment due to any reason, only leave encashment is possible. During the employee's service, such encashment may not be possible. Please refer to the Act.