Comp. Off Leave Encashment Policy

Greetings of the day to all Members,

In our company, we are planning for Comp. off Leave encashment policy.

Could you please suggest me on this to come out with a policy.


Hi @sridharnp

There are no rules in specific to Comp off as strict as Factories act or other acts when compared to S&CE Act.

Comp-off’s are usually given for an employee to compensate the extra hour worked and the basic guideline is that “Employee should consume them immediately” in-order not to be over burdened.

But things are different in corporate and that’s why people usually say within 30 days he should be given day off etc., but there are no SOP for this.

If you are en-cashing this - it is against the basic guidelines this leave is meant for - you can always en-cash AL and EL but other leaves are meant to be taken and cannot be converted into monetary benefits like encashment.

Rather try paying Double salary instead of off etc.,

If at all going for encashment:

These Compensatory off require measurement on an actual basis and not on actuarial basis. Measurement should take into account the following points:-

(i) Leave at credit needs to availed/encashed within twelve months

(ii) Cost to Company (CTC) and

(iii) Probability that a portion of leave may lapse without giving rise to any Liability.

For interim valuations short-term benefits should be treated as benefits payable within twelve months from the end of the financial year and not from present valuation date.

Hope this helps!

Attached a PDF for different state rules on this.LeaveCompoff.pdf (920.9 KB)

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