How Should I Handle a Decade of Unused Earned Leave for a Departing Director?

Dear All,

I'm facing a problem regarding the Earned Leave Benefits. Our Managing Director resigned from the organization last month after working here for the past 10 years. Up to now, he hasn't taken the leave as per the record, and now he's asking about the EL to be paid for the past 10 years. I'm wondering if there is any procedure for paying such a long leave balance. One more thing, until now, we haven't paid leave to any employee.

To my knowledge, leave can be encashed up to one year. Now, please suggest to me what I should do as he's asking to prepare his details.

With Regards,
Sunita Nain

Sunita,

Is there any policy in your company that expresses how many earned leaves one can avail in a year? What is the accumulation limit? If not, according to the law, you have to calculate 1 earned leave for every 20 days, which amounts to 18 days and 18 * 10 years = 180 days. Therefore, you have to provide encashment for 180 days.

SJ :D

Mr. Joshi,

Thanks for the reply; it'll help me to look over the matter.

Well, we provide 20 days of EL for individuals working more than 5 years. I'll discuss this with the management.

With Regards,
Sunita Nain

Sunta, you are going against the law. Please look into this matter seriously; otherwise, your company will be in trouble.

SJ :D

Dear All,

Please look into the points below:

Firstly, one day of earned leave (EL) is accrued for every 20 days worked by an employee, not based on 20 days remaining on the payroll.

Secondly, you cannot allocate 15 days of leave to employees with less than 5 years of service in the same organization, while 20 days can be granted to those who have been employed for more than 5 years. A manager should not receive fewer leave days compared to the previous year with the same number of working days, especially if they have been part of the organization for 2 years, whereas officers under their supervision, who have been with the company for 6 years, are granted more leave. (It is possible that the total work experience of the manager exceeds that of the officers).

Regards,
Dabas

Sunita,

The leave encashment is done as per the company's policy. The leave encashment is no doubt paid only for one year; pertaining to that year when he resigned because there are policies in some companies that the leave is not carried forward to the next year. When the financial year is finished, the leaves will be paid for that year. So, review the company policies and then make the payment with respect to his basic salary.

Regards,
Vivek

Hi,

Terms and conditions of appointments are decided by the Board and approved by the General Body. Check what has been approved by the Board. Managing Directors' remunerations are governed by the Companies Act as well.

Rather than checking in employment law, check what was approved by the General Body. One more clue I will give: Does his remuneration allow for Leave Travel Allowance? If yes, has he claimed this every year? If he has claimed this every year, he surely must have proceeded on leave. He cannot now claim that he has not availed leave.

Siva