Seeking Case Laws and Practices on Leave Encashment and Notice Period Management: Can You Help?

Leave Encashment Provisions

Dear All, If you have case laws pertaining to leave encashment at the time of separation and during the service period, please share them. Views, positions, and practices pertaining to the notice period and availing of leave accumulation are also requested. I appreciate your inputs in this forum as well.

Thanks and best wishes,

Regards, Ram K Navaratna

Number of Leaves and Encashment Policies
The number of leaves an employee is entitled to, the carry forward of unavailed leave, the maximum number of such accumulations, and encashment will depend upon the nature of the industry and the state rules in this regard. Therefore, there is no need to refer to any case studies, but you can refer to the Act applicable to your establishment. If it is a factory, then refer to the Factories Act; if a plantation, refer to the Plantation Labour Act; and if a shop or commercial establishment, refer to your state's Shops and Commercial Establishments Act.

None of these Acts permits encashment while in service, though the balance of earned leave shall be encashed at the time of discharge of any employee. The Factories Act permits the accumulation of 24 leaves, whereas it is 30 under various Shops Acts.

Dear Madhu, Thank you. The position of the law is clear. The trend is that many employees disappear without notice or without complying with the notice clause. However, leave is accumulated in their account. What should the employer's action be?

Thanks,

Regards, Ram K Navaratna

If the employee concerned is classified as a 'workman,' then they may be granted leave encashment. This is because there is no provision stating that a worker must provide advance notice if they intend to leave the company. However, to terminate an employee's service, the employer is required to provide notice.

Conversely, if the employee does not fall under the category of 'workman,' you can offset the leave encashment against the notice period. This should not pose any issue.