Confused About Leave Encashment for Full-Year Workers? Need Help Clarifying Policy

Dear All,

I am familiar with the Leave Policy, but I just faced a new problem regarding Leave Encashment. If an individual has not taken any leave and worked for the full year, and the company does not have any Carry Forward policy, will they be eligible for PL/EL encashment?

According to my Finance team, there are 365 days in a year, and the Associate has received a salary for 365 days. Therefore, there is no PL encashment. If we pay for 15 days of encashment, it means the Associate will receive 365 + 15 = 380 days' salary in one year, which is incorrect.

However, I consulted with one of my former senior HR persons, and he mentioned that if the employee has worked the full year without taking any leave, then they will be eligible for Leave encashment. This is because it is over and above the working days, and the leave itself suggests Earned Leave, which the employee has earned. In this case, the employee would receive 365 + 15 (12.5 months) days' salary in a year.

Please assist me in correcting the system and suggesting the correct procedure so that I can address this with my Finance team and persuade them to follow the appropriate practice.

Thank you.

Dear Nirmal,

The employee will get encashment, but it depends on your company's leave policy because some companies have a carry-forward policy, some have an encashment policy, and some have a lapse policy. Please check what policy your company is following, and if they don't have any policy, then try to convince them for encashment.

Regards,
Fahd Khan Sherani

Dear Fahd,

Thank you for your response. I am still not getting the correct picture, as I am referring to those companies that do not have any carry-forward policy and do not offer leave encashment for PL/EL. I believe that if a company does not have a carry-forward policy, they should provide encashment for PL/EL.

Looking forward to hearing more on this matter.

Best regards, [Your Name]

Dear Nirmal,

The employee will get leave encashment because the individual has not taken any leave in the year, and the company also does not have a carry-forward policy. Then you have to provide leave encasement on a salary basis. For example, in my company, the company provides CL-14, EL-30, OPL-2, totaling 46, in which CL and OPL are not encashed, but EL will be encashed based on his/her salary. If the individual has used CL and OPL only during the year and EL remaining 30, then we encashed the full EL of the individual as per salary.

Now, I think you will understand.

Regards, Ashish