Hi, I want to know whether an employee leaving the job is eligible for Leave Encashment or no? If yes, is that amount taxable?
From India, Curchorem
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1From India, Curchorem
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Yes, The employee is eligible for Leave encashment on pro rata basis if the leave is credited at the start of financial year. yes it is taxable
From India, Mumbai
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From India, Mumbai
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Our company provides an encashment of 50% for 10 days of medical leave per year. If an employee or worker retires at the beginning of the calendar year, are they eligible to avail the entire 10 days of leave or encashment? If not, kindly direct me to the Act amendment and the section/rule where this is specified. Please assist me with this.
Regards,
Masterguna
From India, Delhi
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Regards,
Masterguna
From India, Delhi
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Whatever the policy of the company regarding leave encashment, it cannot be contrary to the provisions of the labor law applicable. The applicable law depends on the settings in which you are employed, whether it is a factory or an establishment, etc. Moreover, it has to be seen whether the act is applicable to you, depending on your position in the organization. Without these details, it will be difficult to take a view on the issues raised by you.
Regards
From India, Madras
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Regards
From India, Madras
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Dear Mr.V.Harikrishnan Joint Commissioner of Labour(Retired) Government of Tamilnadu Thanks a lot for updates on leave encashment . Regards, AK Sharma Manager- Compliance
From India, Mumbai
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From India, Mumbai
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Friends, Good news for all of you. Leave encashment at the time of resignation is not taxable. Pl go through attached file for High Court decision in this regard. Thanks
From India, Malappuram
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From India, Malappuram
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Thank you very much for your reply. We are a manufacturing (factory) company, and I am designated there as Dy. Manager (P&A). Earlier, our company used to provide encashment of 50% for 10 days of medical leave for the year up to the current date. Recently, some of our workmen retired in January 2012 and availed full encashment for the entire year of 2012. My question is, can we adjust this encashment proportionately on a monthly basis and calculate it accordingly for the retired workman? If yes, kindly guide me to the relevant Act amendment and the section/rule where this is specified.
Please assist me with this matter.
Regards,
Master Guna.
From India, Delhi
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Please assist me with this matter.
Regards,
Master Guna.
From India, Delhi
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Dear Sir, The Employee leaving the job is eligible for leave encashment amount. Leave Encashment amount is taxable amount. D.Gurumurthy HR/IR Consultant
From India, Hyderabad
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From India, Hyderabad
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Leave Encashment Eligibility
Total number of month days from January to the last month * 2/3 = Number of days he/she must have worked; otherwise, leave encashment will not be given.
Number of Leaves to be Encashed Formula
Number of days actually worked / 20 = Number of leaves to be encashed.
Leave Encashment Formula
Basic/26 * total leaves pending.
Regards,
Bhagyashree
From India, Mumbai
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Total number of month days from January to the last month * 2/3 = Number of days he/she must have worked; otherwise, leave encashment will not be given.
Number of Leaves to be Encashed Formula
Number of days actually worked / 20 = Number of leaves to be encashed.
Leave Encashment Formula
Basic/26 * total leaves pending.
Regards,
Bhagyashree
From India, Mumbai
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Dear Sir, Medical leave falls under which central act? In Maharashtra, sick leave falls under Standing Orders. Is there any other act that comprises medical leave and its encashment? Sir, please advise on this.
Regards, Mangesh Wakodkar Aurangabad.
From India, Pune
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Regards, Mangesh Wakodkar Aurangabad.
From India, Pune
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Hi one of our existing employee come to us with no salary last month we have paid him salary against his 10 EL, can any one tell me how will we calculate his salary this month, Regards Ali
From India, New Delhi
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From India, New Delhi
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As yours is a factory, the encashment of earned leave by "workmen" as defined in the Factories Act is governed by the provisions of Chapter VII of the Factories Act and specifically according to the provisions of section 79(3). You have raised the issue of encashment of medical leave. This stands on a different footing. The issue could be addressed depending on:
(i) Whether you have an agreement with the workmen regarding encashment of medical leave? If so, the encashment has to be allowed according to the terms of the agreement, and the terms of the agreement cannot be changed by the management on its own without the concurrence of the Union.
(ii) If there is no agreement, the question is whether you have certified standing orders applicable to the workmen, and in the certified standing orders, whether there are any provisions regarding encashment of medical leave. If so, the provisions of the certified standing orders regarding encashment of medical leave have to be followed.
(iii) If there are no certified standing orders, then you have to see whether the appointment order issued to the workmen contains a clause relating to encashment of medical leave. If so, that clause has to be followed. (Model Standing orders do not contain a clause regarding encashment of medical leave).
(iv) If the appointment order is silent, then the encashment can be according to the policy of the company in this regard. Though your company policy may not say that the encashment of medical leave of an employee who leaves the company in the middle of the year will be proportionate to the services rendered by him during that year, you will be justified in permitting encashment proportionate to the services rendered during that year. However, I want to sound a note of caution here. If the practice of allowing the encashment of full medical leave to an employee even if he leaves the services of the company at the beginning of the year is in vogue for a long time, a change to proportional encashment may attract Section 9A of the Industrial Disputes Act regarding a change in conditions of service. If you have a Union of workmen, there is a possibility that they may raise a dispute over this issue under the provisions of the Industrial Disputes Act.
Regards,
From India, Madras
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(i) Whether you have an agreement with the workmen regarding encashment of medical leave? If so, the encashment has to be allowed according to the terms of the agreement, and the terms of the agreement cannot be changed by the management on its own without the concurrence of the Union.
(ii) If there is no agreement, the question is whether you have certified standing orders applicable to the workmen, and in the certified standing orders, whether there are any provisions regarding encashment of medical leave. If so, the provisions of the certified standing orders regarding encashment of medical leave have to be followed.
(iii) If there are no certified standing orders, then you have to see whether the appointment order issued to the workmen contains a clause relating to encashment of medical leave. If so, that clause has to be followed. (Model Standing orders do not contain a clause regarding encashment of medical leave).
(iv) If the appointment order is silent, then the encashment can be according to the policy of the company in this regard. Though your company policy may not say that the encashment of medical leave of an employee who leaves the company in the middle of the year will be proportionate to the services rendered by him during that year, you will be justified in permitting encashment proportionate to the services rendered during that year. However, I want to sound a note of caution here. If the practice of allowing the encashment of full medical leave to an employee even if he leaves the services of the company at the beginning of the year is in vogue for a long time, a change to proportional encashment may attract Section 9A of the Industrial Disputes Act regarding a change in conditions of service. If you have a Union of workmen, there is a possibility that they may raise a dispute over this issue under the provisions of the Industrial Disputes Act.
Regards,
From India, Madras
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PF Case Law - Leave Encashment.doc
PF Contribution on Leave Encashment - Clarification by EPFO.pdf