Leave Encashment Policy 2023: Will Unused Paid Leaves Be Cashed Out by Employers?

Respected professionals,

If a company allows a total of 12 paid leaves (CL/EL) in a year and an employee has taken only 7 paid leaves by the end of the year, will the remaining 5 paid leaves be encashed by the employer under the Leave Encashment Policy 2023?

Dear Kritika,

From my knowledge, the leave policy is completely based on the company's decision.

Understanding Leave Encashment

The policy regarding leave encashment can vary from company to company, and it is important to refer to the specific policies of the employer in question. However, I can provide you with a general understanding of how leave encashment works.

In your scenario, if the company allows a total of 12 paid leaves in a year and the employee has taken only 7 paid leaves, it means that there are 5 remaining paid leaves. If the company's leave encashment policy states that the remaining leave days will be encashed, then the employer would provide the employee with monetary compensation for those 5 unused paid leaves.

It is important to note that specific policies regarding leave encashment, including the calculation of the compensation amount and any limitations or conditions, are determined by the employer. Therefore, it's recommended to refer to the company's official policy or consult with the HR department to obtain accurate information about their leave encashment policy for the year 2023.

Hi, Since you mentioned CL & EL, I presume that your company provides CL & EL.

Leave Policy Details

If we delve a little deeper into the leave policy, the unavailed portion of CL (Casual Leave) shall automatically lapse at the end of the year. Regarding EL (Earned Leave), unavailed EL can be carried forward to the next year. However, in the absence of a leave policy, you may devise a leave policy where you have to set a limit for EL accumulation.