RE: Priviledge Leave/ Earned Leave- whether matter of right

Querist : Anonymous (Querist) 23 November 2009 This query is : Resolved
Dear Sir,
In a Private Sector Bank, [allegedly a subsidiary of Public Sector Bank, holding 98% shareholding in this bank], which is a Banking Company within the meanings of The Companies Act 1956 & The Banking Regulation Act 1949, has following provisions in Service condition about Priviledge leave/ Earned Leave:
1. Priviledge leave upto 240 days can be accumulated by an employee during service period, which is encashed on the date of superannuation/ retirement. No other specic provision say in case of resignation is provided i.e. neither barred nor allowed.
2. At the time of resignation the earned / priviledged leave are not allowed to be encashed. However in Parent bank 1/2 of accumulated leave are permitted to be encashed.
My query:
a)whether earned leave/ priviledge leave [which is a right under the law] of an employee can be denied by employer on resignation and whether employer has any right not to allow encashment when earlier employer has denied the same to employee on official exigencies.
b) What provision of Law governs the rules relating to privilege leave. Please note that Partial provisions of The Shop & establishment Act are applicable upon the Bank.
c)Service conditions interalia provides that at the time of resignation three months notice or payment in lieu thereof is provided which may be termed as liquidated damages and when appointment contract provides for specific liquidated damages, whether employer is entitled to add more damages by way of forfieting priviledge /earned leave.
An early clarification is solicited.
Thanks & regards.

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Raj Kumar Makkad (Expert) 23 November 2009
As you described that no earned leave is provided in case of resignation so employer is within his right not to allow for its encashment within the rules of the bank. It depends upon the terms of the appointment whether the leave shall be allowed to be encashed at the time of resignation or not as is done in the parent bank of yours bank. If no mention is in the rules then the matter can be decided on the basis of practice being adopted in other banks. so far period of notice is concerned, it is not for this purpose. The leave matter is entirely different than the notice period. This is a reward which can be denied if an employee is leaving his employer before the accurate time of reward means superannuation.

Sachin Bhatia (Expert) 23 November 2009
It depends upon the terms of the appointment whether the leave shall be allowed to be encashed at the time of resignation or not as is done in the parent bank of yours bank. If no mention is in the rules then the matter can be decided on the basis of practice being adopted in other banks.

H. S. Thukral (Expert) 24 November 2009
Dear Author

The whole purpose of privilege Leave is that an employee after working for a period should go on leave and some legislations provide that an employee had to avail the leave or it would lapse. Usually the leave which must be availed is 15 days per year. Some employer provide more than 15 days which is mandatory, PL in a year and thus there can be a mutual agreement to encash the balance leave but there is no law on it. However in exegencies of business it may not be possible for an employee to go on leave and in such contigencies law allows accumulation of leave for a period which can be altered mutually.

In view of the above the employer is under no obligation to encash the leave if there is no agreement to that effect However if the services of an employee are terminated before he has availed leave or his application for leave has not be granted before he opt to quit the employment then in such cases the employer is liable to pay him for the accumulated leave.

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