• Leave encashment right ceased

Dear Sir/s,

I need  a legal advice on the leave encashment which was being provided by my company but discontinued making a lapse of earlier accumulated leave without earlier announcement

I Joined in September 2010 as  Manager HR.

We had drafted & followed leave policy which said "15 EL credited to an employee per year accumulated till 45 days and any earned leave in excess of 45 days shall not be carried forward to and accumulated with the EL entitlement for the next year and leaves in excess of 45 days shall be enchased and paid to the employee."

    We followed this policy , however no one except one employee encashed excess leaves in between and carried till maximum and all accumulated leaves got encashed at the time of resignation / termination of employment. This was going fine. people  encashed leaves like 58, 62, 50 etc.

    Our company got acquired by another in July 2014.

    We still continued to pay full encashment to resigned employees till 2015.

    In August 2015, when I myself needed some money , I thought to encash 30 leaves( out of 63); Since this was approved earlier to one senior employee in 2014 instead of HR opposition  to encash in mid year , I didn't ask my boss (as he was on leave) and included that in the payroll. ( I do the payroll)

    When he saw the payroll, he was angry as why it was not asked with him and we had mail trails on this.

    I m a person who cannot take a blame of being fraudulent and had my impressions good in all due course of my tenure, hence I returned the encashement amount .

    Now as on March 2016, I have 68 leaves to be encashed but management have sent mail as below:

    "You will be aware that in the new HR Policies encashment of leave has been discontinued since the company is still continuing to make a loss and cannot afford this additional cost burden.

     However, since this policy was applicable for staff earlier, the following amendment is made with effect from 1st April 2016 and will be applicable to only staff at Gurgaon and the state-heads/teams.

     1. For Staff - Gurgaon office, state heads, state-teams

    - Leave accumulated as on 31st March 2016 is to be calculated.

    2. A maximum of 15 days of leave can be accumulated and this will be carried forward.

    3. Of the balance in excess of 15 days, please calculate 50% of the leave and freeze this amount. The remaining will consider to have lapsed.
    4. When the team members in this list leave the organisation, then they will get 50% of the leave accumulated as per point number 3 above as per their salary on the 31st of March 2016.
    Now this means ,out of 68,  I can carry forward only 15, balance remains = 53 and I will get encashment on 26 leaves and that too when I'll leave , not now.

My query is that how can the benefit be withdrawn to existing employees ( roughly 10 emp to be given enacashment) when others have already got that. I accept the discontinuation but encashment to all accumulated leave should be given .

Company was making loss since inception in 2010 and even after acquisition they gave encashment of 390000 to senior employee in dec 2014. This is truly biasness & unfairness.

Kindly suggest.

Asked 2 years ago in Labour from New Delhi, Delhi
Religion: <span class="translation_missing" title="translation missing: en.application.none">None</span>
 1) Earned Leave encashment is a right equal to the right to property guaranteed under Article 300 A of the Constitution and the same cannot be deprived illegally

2) when employee leaves organisation employee should be entitled to full leave encashment 

3) in fact courts have held employees can encash their earned leave on the day of retirement irrespective of the pendency of disciplinary proceedings.

4) the decision of management to lapse accumulated leave of existing employees is patently illegal 

5) under Bombay shops and Establishment act Leave with pay can be accumulated upto 42 days.
Ajay Sethi
Advocate, Mumbai
44472 Answers
2585 Consultations

5.0 on 5.0

a golden thread in law that once game starts rule cannot be changed in meanwhile. so your all accumulated leave shall be encashed according to the rule applicable before acquisition.  

This is your self earned money In Jitendra singh vs State of Jharkhand it is held by the supreme court that if employee gained any profit according to rule made by employer it cannot be taken back because that profit is his self earned money and employer acts as trustee only. 

You should file case before labour tribunal for encashment of leave. 
Shivendra Pratap Singh
Advocate, Lucknow
4989 Answers
78 Consultations

4.9 on 5.0

1) you would be eligible for leave encashment of accumulated leave till date since company has paid to other  employees also 

2) issue legal notice to company if it fails to pay for leave encashment 

3) number of lawyers on this website from Delhi . contact any of them 

Ajay Sethi
Advocate, Mumbai
44472 Answers
2585 Consultations

5.0 on 5.0

My query is that how can the benefit be withdrawn to existing employees ( roughly 10 emp to be given enacashment) when others have already got that. I accept the discontinuation but encashment to all accumulated leave should be given .

This being a private company they have a protection called  'loss' and from your narration it can be seen that they withdrew this facility with effect from 01.04.2016 only having no retrospective effect. 
While this being so, the company has done a blunder mistake to cut the privileges that was existing earlier by giving a retrospective effect to the status of leave of an employee prior to 01.04.2016.
The above move is unlawful and can be protested or challenged in the court of law. 
If the company decides to make a change in the leave encashment policy, it cannot make  an effect retrospectively.  You apply for the encashment in the old pattern, let the company management refus it in writing, then you may approach the court challenging the company's decision which infringes the rights of an employee. 
T Kalaiselvan
Advocate, Vellore
34587 Answers
373 Consultations

5.0 on 5.0

1. Am I eligible to get encashment upto 68 leaves accumulated as on 31st March 2016 if discontinuation of encashment is effective from 1st April 2016. (Supporting fact : All previous employees resigned earlier have got encashment on full accumulated leaves beyond 45.)

You are eligible to claim the encashment because such change in the policy cannot take a retrospective effect.  Moreover the settlement of the same to other employees is an example and strong evidence against the company's injustice to its present employees in this regard.  If the company states that it is suffering losses for a long time, it cannot give different treatment/decisions to different employees on the same grounds.  If the employees who left the company before 01.04.2016 were paid this concession, then effect to that period is to be lowed to the present employees who were eligible for the said concession during that time.

2. What is the first legaI recourse I can take  if management doesn't change their decision. Whom should I approach for legal help regarding this. Reference of person / law from Delhi would be great as I put up in Delhi. 

First you apply claiming the leave encashment benefits as per your authorisation for the period prior to the date of  change of the policy, let the management deny the privilege in writing, you may take up this matter to the court of law for justice, let the court decide. 

3. Please share 2-3 similar cases for reference to be sent to employer.

You can search for them in the internet, they are not supplied here. 
T Kalaiselvan
Advocate, Vellore
34587 Answers
373 Consultations

5.0 on 5.0

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