Is a Staff Member Eligible for Leave Encashment After Resigning in Just 5 Months?

Dear Team, Request your guidance on whether a staff member who joined on March 23 and resigned on August 23 is eligible for leave encashment in their full and final settlement.

First of all, let him be entitled to leave and then encash it. One will get his leave credited only after 12 months of service. How can he demand the encashment? There can be pro rata credit of leave, but that happens only at the end of December. Therefore, you can deny encashment of leave now.

The appointment is for only 6 months. During the probation period, an employee does not earn Privilege Leave/Earned Leave/Annual Leave. Only CL accrues during this period, and it cannot be encashed. There is no mention of the probationary period in the query. For the remaining period after probation, proportionate credit can be given, and the balance period can be encashed if there is a policy for it.

Dear Team, Thanks for your support.

Explanation for Leave Encashment Issue

Dear Madhu Sir,

The auditor marked NC for not paying leave encashment in full and final. How can I explain this to the auditor? We have shown the leave balance as per monthly additions along with 1.5 leaves for 6 months.

You can explain the NC by giving details of the Leave Policy. First of all, is it an encashable leave? Then, during probation, one doesn't have a right to earn any leave other than casual leave, and CL is not encashable.

That is the reason. You have credited the leave right from the month of joining. Obviously, when you have credited the leave, the employee is entitled to get it (either he can avail it or encash it).

You may reply to the Auditor that 'Credit given is only system-generated' and that does not mean that he can take it or encash it before he becomes entitled to avail it. He becomes entitled to avail leave or encash the leave only in the next January.

The above reply would close the audit query.