Dear Friends,
Though this Earned Leave Encashment is being discussed at different times and forums still there is some difference of opinion.
Section 79 of The Factories Act, 1948 says that every employee who works for 240 days in the previous year is entitled to Earned leave @ 1 leave per 20 days of working.
When the worker is discharged or dismissed or quits employment, the unused earned leave at his credit has to be paid.
A worker is entitled to accumulate upto 30 days of earned leave and over and above 30 days will lapse.
Suppose, a person who is having earned leave at his credit more than allowable 30 days and has not taken leave nor organisation didnot allow him to take leave, then the additional leave is to be compensated or encashed? Is this the company policy or is it mandatory? This is not very clear in the Factories Act.
I invite our learned friends to post their views along with mandatory laws/rules (if any) for the benefit of HR people.
-Srinaren
From India, Bangalore
16Though this Earned Leave Encashment is being discussed at different times and forums still there is some difference of opinion.
Section 79 of The Factories Act, 1948 says that every employee who works for 240 days in the previous year is entitled to Earned leave @ 1 leave per 20 days of working.
When the worker is discharged or dismissed or quits employment, the unused earned leave at his credit has to be paid.
A worker is entitled to accumulate upto 30 days of earned leave and over and above 30 days will lapse.
Suppose, a person who is having earned leave at his credit more than allowable 30 days and has not taken leave nor organisation didnot allow him to take leave, then the additional leave is to be compensated or encashed? Is this the company policy or is it mandatory? This is not very clear in the Factories Act.
I invite our learned friends to post their views along with mandatory laws/rules (if any) for the benefit of HR people.
-Srinaren
From India, Bangalore
Dear Srinaren jiI asked the same question to our friends several times....but no answer. This is purely company policy. In our organisation we are giving 30 days as EL ,12 SL (Un-covered ESI holders are allowed) . Accumlation of EL up to 60. More than that will be encashable. where as now most of the employees cross 100 - 150. Mangement is allowed since 4 years for encashmet of EL . Now new person has taken over charges and there is no law of encahment more than 30 days will be lapsed. My situaion like that. Then I made a Leave policy and putup to the board and then some short of relief. So its PURELY MANAGEMENT POLICY for enchashment. So I suggest you too prepare the leave policy and get the approval from the concern.Regards,PBS KUMAR9848499629
From India, Kakinada
From India, Kakinada
Dear Kumarji,
You are absolutely right. It is the Company Policy regarding the encashment. Our certified standing orders says that one can accumulate upto 30 days and the excess leave will lapse. Ours is Apparel industry and there is always shortage of workers as the attrition rate is very high due to demand and supply gap. When they ask for leave, we will say no and when the leave accumulates to more than 30, we say the excess leave got lapsed!! But for a person who has worked for some time and leaves the organisation, we pay him the leave salary which he has at his credit. For a person who is still serving the organisation, we deny the leave encashment for the excess accumulated leave! I want our other friends to come out with their views and suggestions.
-Srinaren
From India, Bangalore
You are absolutely right. It is the Company Policy regarding the encashment. Our certified standing orders says that one can accumulate upto 30 days and the excess leave will lapse. Ours is Apparel industry and there is always shortage of workers as the attrition rate is very high due to demand and supply gap. When they ask for leave, we will say no and when the leave accumulates to more than 30, we say the excess leave got lapsed!! But for a person who has worked for some time and leaves the organisation, we pay him the leave salary which he has at his credit. For a person who is still serving the organisation, we deny the leave encashment for the excess accumulated leave! I want our other friends to come out with their views and suggestions.
-Srinaren
From India, Bangalore
dear friends,
Let me clear my points Earned Leave (EL) is coming under Factory Act and it compulsary to give 1 day el for every 20 working day. It is also necessary for the company to carry forward only up to 30 days el and the balance leave above 30 days to be encashed on basic salary, other wise it is a major violation. So i feel it is not a company policy and it is a statutory obligation of the employer.
thanks & regards,
kumaran siva
From India, Delhi
Let me clear my points Earned Leave (EL) is coming under Factory Act and it compulsary to give 1 day el for every 20 working day. It is also necessary for the company to carry forward only up to 30 days el and the balance leave above 30 days to be encashed on basic salary, other wise it is a major violation. So i feel it is not a company policy and it is a statutory obligation of the employer.
thanks & regards,
kumaran siva
From India, Delhi
Dear Srinaren ji,You are saying that the Regarding the EL issue the rules were already mentioned in the company's certified standing orders. You need not worry to change that mutual understand policy. You already aware about Section - 9A of the Industrial Disputies Act,1947 which is incorported hereunder:9A. SECTION - No employer, who proposes to effect any change in the conditions of service applicable to any workman in respect of any matter specified in the Fourth Schedule, shall effect such change, - (a) without giving to the workman likely to be affected by such change a notice in the prescribed manner of the nature of the change proposed to be effected; or (b) within twenty-one days of giving such notice : Provided that no notice shall be required for effecting any such change – (a) where the change is effected in pursuance of any settlement or award; or (b) where the workman likely to be affected by the change are persons to whom the Fundamental and Supplementary Rules, Civil Services (Classification, Control and Appeal) Rules, Civil Service (Temporary Service) Rules, Revised Leave Rules, Civil Services Regulations, Civilians in Defense Services (Classification, Control and Appeal) Rules or the Indian Railway Establishment Code or any other rules or regulations that may be notified in this behalf by the appropriate Government in the Official Gazette, apply. So accordigly you may putup a notice for chage / enhancement of this EL encashment proposal in that. This may solve your problem. Because in the EL issue the Factories Act not clear, so we (HR - HOD) have to take intiate on this such as prepare a Policy etc.Regards,PBS KUMAR
From India, Kakinada
From India, Kakinada
Accumalaton of El more than prescribed by the Factories Act and Shop Act automatically laps as per the interpretation of both the provisions.However if any employer want to give etc benefit to their employees can make specific rule and policy for encashment of the same. its totally depends on will and wish of employer.
there is no statutory obligation of the employer to enchash leave more than that priscribed under these Acts.
there is no statutory obligation of the employer to enchash leave more than that priscribed under these Acts.
Hi All,
I have a query and require help. I work in a retail sector. I am a Store Manager. I have given my resignation and currently serving a notice period. I had a word with HR regarding my Leave Encashment but HR say there no such policy in the company. I have read my Appointment letter but nothing is mentioned in it.
Request you all to please help if there is any law regarding leave encashment in retail sector.
From India, Mumbai
I have a query and require help. I work in a retail sector. I am a Store Manager. I have given my resignation and currently serving a notice period. I had a word with HR regarding my Leave Encashment but HR say there no such policy in the company. I have read my Appointment letter but nothing is mentioned in it.
Request you all to please help if there is any law regarding leave encashment in retail sector.
From India, Mumbai
Section 79-82, so far as may be, shall apply.
• Where a worker has worked for a period of 240 days or more during a calendar year, he is entitled during the subsequent calendar year, leave with wages in manner calculated as under –
1. If an adult: 1 day for every 20 days of work performed by him during the previous calendar year.
2. If a child: 1 day for every 15 days of work performed by him during the previous calendar year.
3. For this purpose, the following shall be counted –
a. Any days of lay-off.
b. Maternity leave not exceeding 12 weeks, in case of female worker.
c. The leave earned in the year prior to that in which the leave is enjoyed.
• Procedure for availing leave is also laid down and the scheme for the purpose may also be formulated. The same is also required to be displayed. It shall be in force for 12 months from the date it comes into force.
• If a worker is terminated before he has taken the entire leave, or if having applied for and having not been granted such leave, the worker quits his employment before he has taken leave, the occupier shall pay him the amount payable under Section 80 which shall be at a rate equal to the daily average of his total full time earnings for the days he actually worked during the month immediately preceding his leave.
From India, New Delhi
• Where a worker has worked for a period of 240 days or more during a calendar year, he is entitled during the subsequent calendar year, leave with wages in manner calculated as under –
1. If an adult: 1 day for every 20 days of work performed by him during the previous calendar year.
2. If a child: 1 day for every 15 days of work performed by him during the previous calendar year.
3. For this purpose, the following shall be counted –
a. Any days of lay-off.
b. Maternity leave not exceeding 12 weeks, in case of female worker.
c. The leave earned in the year prior to that in which the leave is enjoyed.
• Procedure for availing leave is also laid down and the scheme for the purpose may also be formulated. The same is also required to be displayed. It shall be in force for 12 months from the date it comes into force.
• If a worker is terminated before he has taken the entire leave, or if having applied for and having not been granted such leave, the worker quits his employment before he has taken leave, the occupier shall pay him the amount payable under Section 80 which shall be at a rate equal to the daily average of his total full time earnings for the days he actually worked during the month immediately preceding his leave.
From India, New Delhi
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