Hi All, whether leave encashment is mandatory in India? Is it governed by law?

Thanks for asking Albus

@Supraja Ravi I think its mandatory for sure

Hi @Supraja Ravi, leave encashment in not mandatory under law. It varies from companies to companies.

Hi @Supraja Ravi The leave encashment is not a mandate under the local SEA. It defines the maximum limit of of accumulation. Leave encashment is based on company policies, and tax structure.

ah I see. @Rohan Mankad can you weigh in? I thought we were told its mandatory

Thanks for the tag Kartik, while law does not define the encashment of leaves it does mentions the accumulation and carry forward as wristy pointed out. However, by that logic @Supraja Ravi leave encashment happens only for the earned leaves for the time spent by the employees in the organisation. At Springworks we do have a Leave Encashment policy.

but does the law mandate encashment on leaving?

No Kartik there is no precedent in the law which says you have to encash the leaves.

@Rohan Mankad @Kartik Mandaville I am happy to guide here

Is it legal for a company to lapse all earned leaves, without giving the chance to encash them as well?

Yes, the can, based on the company policy.

And can this be done in retrospect ?

Meaning?

The previous company policy logged leaves on a calendar year basis and allowed up to 10 carry forward leaves. Then, in April they changed the policy to financial year basis, and told us that any leaves accrued until March have lapsed (so zero carry forwarded leaves) I’m just wondering if this is allowed as per labour law

@Samruddhi As per the mentioned, it will be good to know the complete context. With the understanding from the written only, it is not a good practice, and can be contested under compliance.

I have to agree with @Kartik Mandaville I feel it is mandatory every EL/AL, is an "EARNED" leave, which basically is given after an employee fulfils the criteria of completing a certain number of days of work Which means that the employee can either avail for it whenever required or if not availed it needs to be compensated for

As per my experience, if employees are provided to utilise all leaves, they intend to take a break from work and it leads to mental, physical, and psychological well being. Please note, this is only my thought based on my experience, and employees acceptability towards it.