Leave Encashment: How many holidays can be encashed every year, on what basis is the payment done? know details

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If you are also employed, then you should be aware that on what basis your company encashes the holidays and the maximum number of holidays that can be cashed.



When you work in a company, you are given some holidays. Some of these holidays are such that, if not spent, the employee is given money in lieu of those holidays. This is called Leave Encashment. In the salary structure, all the employees are given information about how many holidays they will get in a year and how much they can cash. If you are also employed, then you should be aware that on what basis your company encashes the holidays and the maximum number of holidays that can be cashed.

Maximum 30 holidays can be encashed

Any company usually has a rule to encash maximum 30 holidays for a year. The government also gives tax exemption on Leave Encashment of maximum 30 holidays annually. However, in this case the rules of the company may also be different. In some companies, encashment of leave is done only after the completion of the year, while in some companies this amount is given lump sum at the time of leaving the company.

Payment on the basis of basic salary and DA

If you think that one day’s full salary is paid for a holiday, then you are mistaken. Leave Encashment depends on your basic salary and DA. Payment is made accordingly.

Leave Encashment is not mandatory by law

For the purpose of encouraging employees towards maximum work, companies provide Leave Encashment facility, but there is no government rule for Leave Encashment. That is, if a company does not encash your leave, then you cannot file a case against it. Whether or not to provide the facility of Leave Encashment depends on the company.

On which holidays leave encashment is available?

There are many types of holidays in organized sector companies – Sick, Casual, Earned and Privilege. Sick and casual leaves lapse if not used in a calendar year, but earned leave and privilege leave are considered eligible for encashment. But, every company can set its own terms and conditions for these.