Hi everyone! I wanted to understand what is the Leave encashment rule as per the law. I understand from reading a lot of answers on CiteHR about leave encashment that leave encashment is available only after completing 1 year with the firm (please correct me if I am wrong here).
We are an IT company in Maharashtra with 200 employees. Our employees accrue leaves during their probation period (first 6 months) but have access to these leaves only after completing the probation. Now if someone were to resign in the 7th/8th/9th/10th month, would they be eligible for leave encashment even if they have not completed 1 year? All help will be much appreciated. Thank you for your time.
From India, Mumbai
1We are an IT company in Maharashtra with 200 employees. Our employees accrue leaves during their probation period (first 6 months) but have access to these leaves only after completing the probation. Now if someone were to resign in the 7th/8th/9th/10th month, would they be eligible for leave encashment even if they have not completed 1 year? All help will be much appreciated. Thank you for your time.
From India, Mumbai
After completion of 1 year leave entitlement clause will be applicable is a practice by many organizations. But there are other practice also- at the end of the month leave accumulation etc.
In this organization after 6 month i.e after completion of probationary period leave is allowed. I will suggest to go through the S & E Act of the state to follow leave rule. The organization may also have leave rule but should not be less favorable than statutory limit.
Now if any employee leaves the organization after 6 / 7 / 8 months etc , the employee may get leave encashment as the eligibility criteria is after 6 months if not mentioned otherwise in organization leave rule or S & E Act.
S K Bandyopadhyay ( WB, Howrah)
CEO-USD HR Solutions
+91 98310 81531
skb@usdhrs.in
From India, New Delhi
In this organization after 6 month i.e after completion of probationary period leave is allowed. I will suggest to go through the S & E Act of the state to follow leave rule. The organization may also have leave rule but should not be less favorable than statutory limit.
Now if any employee leaves the organization after 6 / 7 / 8 months etc , the employee may get leave encashment as the eligibility criteria is after 6 months if not mentioned otherwise in organization leave rule or S & E Act.
S K Bandyopadhyay ( WB, Howrah)
CEO-USD HR Solutions
+91 98310 81531
skb@usdhrs.in
From India, New Delhi
Your Question is " if someone were to resign in the 7th/8th/9th/10th month, would they be eligible for leave encashment even if they have not completed 1 year? ". if someone resigns from your company you have give leave encashment, because leave is balance in employees leave account. You may also allow to employee to avail leave before leaving the company.
"if they have not completed 1 year " will apply to those employees who are still in your company . it depends only the S & E Act of the state or your company rules .
From India, Raisen
"if they have not completed 1 year " will apply to those employees who are still in your company . it depends only the S & E Act of the state or your company rules .
From India, Raisen
There is no specific law in India that provides for encasement of leave.
So it is mostly internal rules that companies have.
You need to look at the Maharashtra Shop & Establishment Act (ensure you see the 2017 act and not the older one).
There is a clause saying accumulated leave not used is to be encashed on separation.
However, it then comes to what is accumulated. if he is not eligible then it is not accumulated.
Again, please note that the act basically provides for calander year as starting point of accumulation for previous year's leaves to be used in the next year.
You need to check your internal rules (plus what standing orders say) and what is the statutory regulations under the shop and establishment act and give the better of them
From India, Mumbai
So it is mostly internal rules that companies have.
You need to look at the Maharashtra Shop & Establishment Act (ensure you see the 2017 act and not the older one).
There is a clause saying accumulated leave not used is to be encashed on separation.
However, it then comes to what is accumulated. if he is not eligible then it is not accumulated.
Again, please note that the act basically provides for calander year as starting point of accumulation for previous year's leaves to be used in the next year.
You need to check your internal rules (plus what standing orders say) and what is the statutory regulations under the shop and establishment act and give the better of them
From India, Mumbai
In case the leave accumulated is more than 30 days, the company or employer will need to pay for the excess leave to the employee. According to the 'Occupational Safety, Health and Working Conditions Code' — one of the 4 New Codes on Labour laws, 'employee' in this case means those who are not in managerial or supervisory roles.
“Section 32 of the Occupational Safety, Health and Working Conditions Code, 2020 (OSH Code), has a number of conditions with respect to availing annual leave, carry forward and encashment. Section 32(vii) allows a worker to carry forward annual leave to a subsequent calendar year, up to a maximum of 30 days. In case at the end of the calendar year the annual leave balance exceeds 30, then the employee will be entitled to encash the excess leave and carry forward 30 days to the next year,"
From India, Bangalore
“Section 32 of the Occupational Safety, Health and Working Conditions Code, 2020 (OSH Code), has a number of conditions with respect to availing annual leave, carry forward and encashment. Section 32(vii) allows a worker to carry forward annual leave to a subsequent calendar year, up to a maximum of 30 days. In case at the end of the calendar year the annual leave balance exceeds 30, then the employee will be entitled to encash the excess leave and carry forward 30 days to the next year,"
From India, Bangalore
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