Hi, Experts,
I have worked in a company in Chennai (Tamil Nadu) for 11 years and 6 months before resigning with a 1-month notice as per the clause in my appointment letter. Besides my pending salary, medical, LTA, and gratuity, they are refusing to pay my Leave Encashment amount.
I have been informed by the HR team that there is no legal obligation on the employer; it is solely at their discretion to pay it or not. They also mentioned that due to the company's financial condition not being ideal, they are unable to pay the Leave Encashment amount.
Could you please advise me if this is correct or not? Can I take any legal action if there is a rule in labor laws that supports my claim? Your help is greatly appreciated.
Regards,
Aman Kumar Dubey
From India, Mumbai
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I have worked in a company in Chennai (Tamil Nadu) for 11 years and 6 months before resigning with a 1-month notice as per the clause in my appointment letter. Besides my pending salary, medical, LTA, and gratuity, they are refusing to pay my Leave Encashment amount.
I have been informed by the HR team that there is no legal obligation on the employer; it is solely at their discretion to pay it or not. They also mentioned that due to the company's financial condition not being ideal, they are unable to pay the Leave Encashment amount.
Could you please advise me if this is correct or not? Can I take any legal action if there is a rule in labor laws that supports my claim? Your help is greatly appreciated.
Regards,
Aman Kumar Dubey
From India, Mumbai
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yes employer is legally bound to pay wages in lieu of the quantum of leave to which the employee was entitled immediately before quitting of employment. regards, Kamal
From India, Pune
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186From India, Pune
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Dear Aman,
Not all types of leaves are encashable. Only earned leaves have certain legal obligations for encashment as they are earned against the days served as per provisions of the Factories Act. However, the company can set an upper ceiling for accumulation as well as for encashment (number of such leaves) as the true objective of such leaves is to avail them and not to encash them.
If you do not have strong legal backing to support your case, unless you have established leave rules or standing orders providing for encashment.
Regards,
Shailesh Parikh
Vadodara, Gujarat
From India, Mumbai
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Not all types of leaves are encashable. Only earned leaves have certain legal obligations for encashment as they are earned against the days served as per provisions of the Factories Act. However, the company can set an upper ceiling for accumulation as well as for encashment (number of such leaves) as the true objective of such leaves is to avail them and not to encash them.
If you do not have strong legal backing to support your case, unless you have established leave rules or standing orders providing for encashment.
Regards,
Shailesh Parikh
Vadodara, Gujarat
From India, Mumbai
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Dear Aman Kumar Dubey,
Please read below relevant section 79 from Factories Act with reference to your query.
Factories Act, 1948 - Section 79 - Annual Leave with Wages
(3) If a worker is discharged or dismissed from service or quits his employment or is superannuated or dies while in service, during the course of the calendar year, he or his heir or nominee, as the case may be, shall be entitled to wages in lieu of the quantum of leave to which he was entitled immediately before his discharge, dismissal, quitting of employment, superannuation or death, calculated at the rates specified in sub-section (1), even if he had not worked for the entire period specified in sub-section(1) or sub-section (2) making him eligible to avail of such leave, and such payment shall be made -
• (i) where the worker is discharged or dismissed or quits employments before the expiry of the second working day from the date of such discharge, dismissal or quitting; and
• (ii) where the worker is superannuated or dies while in service, before the expiry of two months from the date of such superannuation or death.
Hence, the employer is bound to pay amount against the quantum of unused Earned Leave when relieving you.
Regards,
Madhusudan
From India, Vijayawada
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Please read below relevant section 79 from Factories Act with reference to your query.
Factories Act, 1948 - Section 79 - Annual Leave with Wages
(3) If a worker is discharged or dismissed from service or quits his employment or is superannuated or dies while in service, during the course of the calendar year, he or his heir or nominee, as the case may be, shall be entitled to wages in lieu of the quantum of leave to which he was entitled immediately before his discharge, dismissal, quitting of employment, superannuation or death, calculated at the rates specified in sub-section (1), even if he had not worked for the entire period specified in sub-section(1) or sub-section (2) making him eligible to avail of such leave, and such payment shall be made -
• (i) where the worker is discharged or dismissed or quits employments before the expiry of the second working day from the date of such discharge, dismissal or quitting; and
• (ii) where the worker is superannuated or dies while in service, before the expiry of two months from the date of such superannuation or death.
Hence, the employer is bound to pay amount against the quantum of unused Earned Leave when relieving you.
Regards,
Madhusudan
From India, Vijayawada
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Dear Mr. Dubey,
It is mandatory as per the Factory Act and other labor laws that the employer is bound to pay your salary up to the extent you have privilege/earned leave in your credit on the date of your exit from the company. Most companies follow the same, but a few do not care at all. In such a situation, an aggrieved employee has a valid claim to recover his leave salary through a civil suit but needs to seek opinion from an advocate.
R.L. Pandey
From India, Hyderabad
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It is mandatory as per the Factory Act and other labor laws that the employer is bound to pay your salary up to the extent you have privilege/earned leave in your credit on the date of your exit from the company. Most companies follow the same, but a few do not care at all. In such a situation, an aggrieved employee has a valid claim to recover his leave salary through a civil suit but needs to seek opinion from an advocate.
R.L. Pandey
From India, Hyderabad
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Aman, does the Factory Act apply to your organization? Does your appointment letter state anything about leave encashment/adjustment with the notice period, etc.? What does your employee handbook say.
If you are still in service, you may want to take a quick look at these and come back with more info.
From India, Mumbai
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If you are still in service, you may want to take a quick look at these and come back with more info.
From India, Mumbai
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Mr. Aman,
If your service was not in a factory setup, you are not entitled to EL encashment under the Factories Act. If it was in a commercial establishment, your entitlement will depend on the provisions of the Tamil Nadu Shops & Commercial Establishment Act. If that is also not applicable, everything depends on the terms of appointment or conditions of service.
Varghese Mathew
9961266966
From India, Thiruvananthapuram
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If your service was not in a factory setup, you are not entitled to EL encashment under the Factories Act. If it was in a commercial establishment, your entitlement will depend on the provisions of the Tamil Nadu Shops & Commercial Establishment Act. If that is also not applicable, everything depends on the terms of appointment or conditions of service.
Varghese Mathew
9961266966
From India, Thiruvananthapuram
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Dear Aman,
As per the Tamil Nadu Shops and Establishment Act, they are legally bound to pay you the leave encashment. See section 25, subsection 3 for reference. However, the maximum accumulation of leaves is 24 days as given under the said Act; hence, the encashment of leaves for 24 days is the maximum encashment you may get legally.
From India, New Delhi
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As per the Tamil Nadu Shops and Establishment Act, they are legally bound to pay you the leave encashment. See section 25, subsection 3 for reference. However, the maximum accumulation of leaves is 24 days as given under the said Act; hence, the encashment of leaves for 24 days is the maximum encashment you may get legally.
From India, New Delhi
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