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Senthil (Employed in ITES)     13 October 2009

Earned Leave and its encashment

I would like to know what is the policy on Earned leave and what does law specify regarding encashing it.

My previous organisation allowed me to encash 24 days one my EL reaches 24 days.  But current organisation states that they will Encash only the number of leaves above 24 days, which will mean at any point of time (if i have served more than 2 years) i will have 24 EL pending with my company which will be paid only during my final settlement or I can avail that leave.

Can any one clarify which is the right practice? or can the company choose to decide on this by themselves.




 6 Replies

Amardeep Srivastava (Senior Law Officer)     15 October 2009

Dear Senthil,

Please refer to the encashment rules of your company. Your encahsment will be regulated by your company rules. There is no seperate law for this.



PBS KUMAR (HR - PROFESSIONAL)     22 October 2009

Dear Sentil ji,

There is no specific rule for the encashment of Els or PLs. Its purely depending upon organisation to organisation. But as per the Factories Act concern any employee while leaving the company the employer has to give the EL payment..



Ashish Ovalekar (Manager Legal & Compliance)     24 October 2009

Dear Senthil,

Each and every state has a Shops and Commercial Establishment Act, which prescribes the minimum number of leaves which a employee is entitled to in a year, and the maximum number of leaves which can be accumulated at a length.

There is no provision in law, which governs the Leave encashment.  Each and every Company have got their own individual HR polices, which governs the Leave Encashment, which normally no government will interfere.





yogita (hr manager)     18 April 2011

Dear All,

Please advice me on the following issue:

we had our leave policy of year 1998 and no revision has done so far with that. as per practice accumlation of 60 days is poosible and encashment of 60 days will be given during seperation. Leave above 60days will be lapsed or forfieted.

In absence of local hr people accumlated mor ethan 60 days and demanding to encash whole leaves i.e 100 days, 155 days to be encashed or they will go to court.

As per my understanding there is no regulations for private organisations specially consulatants under shops and establishment act to pay whole leaves and company will pay according to the policy.

Please also advice that if this practice is in force from last 10 years and no one had objected and no policy was revised do we have any liability to pay the excess leaves?

Thanks & Regards


HR Manager

Srinivasan (HR)     21 April 2011

Dear All,

Whether the EL Encashment should be paid on Basic or on Gross Salary, Act does not mention anything about EL Encashment.



V.Harikrishnan (Labour Law Consultant)     26 April 2011

Dear Mr.Senthil

Please inform the Labour Act which is applicable to your company. Is it the Factories Act or the Shops and Establishments Act. The answer to your query depends on this.

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