Is Our Employee Entitled to Earned Leave Payment After Leaving? Seeking Advice on EL Encashment for 2024

Dear Fraternity,

One of our employees has worked at our factory up until today. Due to management issues, we have asked him to leave. However, he is claiming entitlement to receive payment for his earned leave (EL) encashment for the year 2024, as he has worked up to the current date. Please advise on whether an employee is eligible for EL payment.

Regards,
Hanumanth

Hi, whatever earned leave (EL) balance exists up to the date of relieving should be encashed, and the employee is eligible for EL encashment.

Thanks for your reply. He is claiming that he will be eligible for the 2024 EL encashment as he has worked until December 24. This means he will get EL in January 25.

Please clarify.

Regards, Hanumanth.

Hi, Only the EL balance as of the relieving date should be considered for encashment. Thank you.

The outgoing employee is entitled to receive encashment or take leave with wages for the earned leave (EL) he has accumulated up to the date of his departure.

This point was discussed in another post earlier.

Factory Act and Leave Encashment

The Factory Act wording is very clear. The employee is entitled to encashment of leaves to his credit at the time of separation. Further, he is entitled to leave that would be due but for the fact that he is being terminated. Thus, he will be eligible for proportionate days of EL for the days worked in 2024 also.

"Sec 79 (11) If the employment of a worker who is entitled to leave under sub-section (1) or sub-section (2), as the case may be, is terminated by the occupier before he has taken the entire leave to which he is entitled, or if having applied for and having not been granted such leave, the worker quits his employment, before he has taken the leave, the occupier of the factory shall pay him the amount payable under section 80 in respect of the leave not taken, and such payment shall be made, where the employment of the worker is terminated by the occupier, before the expiry of the second working day after such termination, and where a worker who quits his employment, on or before the next pay day. (12) The unavailed leave of a worker shall not be taken into consideration in computing the period of any notice required to be given before discharge or dismissal."

Entitlement to Wages for Unavailed Leave

Also please see: 79(3) (3) If a worker is discharged or dismissed from service or quits his employment or is superannuated or dies while in service, during the course of the calendar year, he or his heir or nominee, as the case may be, shall be entitled to wages in lieu of the quantum of leave to which he was entitled immediately before his discharge, dismissal, quitting of employment, superannuation or death calculated at the rates specified in sub-section (1), even if he had not worked for the entire period specified in sub-section (1) or sub-section (2) making him eligible to avail of such leave, and such payment shall be made-- (i) where the worker is discharged or dismissed or quits employment, before the expiry of the second working day from the date of such discharge, dismissal or quitting; and (ii) where the worker is superannuated or dies while in service, before the expiry of two months from the date of such superannuation or death.

Credit of EL for the Service Year 2024

Credit of Earned Leave (EL) for the service year 2024 has to be given, and encashment is to be allowed. If there is a higher limit, say 240 days, as per your service conditions or unlimited, then the same may be applied.