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Shaji Joseph (Lawyer)     29 August 2009

PF deduction on Leave Encashment

Can anybody please suggest that whether there will be any PF deduction from leave encashment during his full & final settlement? 


 4 Replies

Arihant AC (Legal Advisor)     31 August 2009

No PF is not applicable on Leave Encashment.


Shekhar K. (Manager - HR & Admin)     31 August 2009

Dear Shaji,

At the time of Full and Final Settlement of an employee, employer has to calculate PF liability on the amount of Leave Encashment and pay the contribution towards PF. Hence, employee PF contribution has to be recovered from the amount of Full and Final Settlement of employee. Hope the matter is clear to you.



Arihant AC (Legal Advisor)     31 August 2009

Dear Shekhar K.

Please refer to CASE NO.: Appeal (civil) 1832 of 2004

Also PF Authority has issue a circular on 05/05/2008 which also indicate that PF is not liable on Leave Encashment.


Manipal Academy of Higher Education


Provident Fund Commissioner

DATE OF JUDGMENT: 12/03/2008

Rama mohan Acharya (Manager HR(Legal))     10 September 2009

To further NAC's reply, I can add the citation : 2008(117)FLR358

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