"Every state in India has a Shops & Establishments Act that mandates the various leave rules for employees. The employers must grant annual leave to employees subject to certain conditions.
“An employee could carry forward a maximum of 30 days of annual leave balance. Beyond this limit, the leaves would lapse. If the employer so desires, the excess leave balance over and above the maximum carry forward limit can be converted to cash instead of letting it expire.”
Recently, the Karnataka government amended this provision and enhanced the carry forward limit to 45 days"
In-order to get this quickly wrapped up, now a maximum of 45 days of leave carry forward can be given for employees who belong to establishments in Karnataka.
After granting the earned leave for 2024, few employees having leave balance above 45. We have an encashment policy. Should we encash the leaves above 45 Nos during January itself.? For eg. 30 days carry forwarded from 2023 to 2024. Also 18 days granted for the year 2024 which is based on the working days in 2023. Here should we encash 3 days? Kindly confirm.
Encashment policy is up to the discretion of the company managment. Usually for practical purposes, companies encourage encashment once in a year (for example during the year end) and when an employee leave the organization. Also please note that 18 days is for the new year and the best practice is to do carrry forward/encashment/lapsse during year end process (i.e as on 31 Dec or 31 Mar) and then do grant for the new year
After posting Leave for the year 2024, there are few employees with more than 45 days in credit. As per S&E carry forward should be max.45, but is there any problem if the total leaves in credit is more than 45 after sanctioning leave for the year.
If your company has Leave policy with Max.45, you can encash the above 45 leaves so that the Maximum leaves are 45 as per company policy.
You should follow company policy if defined already.