Leave Encashment is Right of Employees: Bombay High Court

The Bombay High Court has recently made a significant ruling regarding the entitlement of employees to leave encashment. In a case brought before the court by two individuals who had dedicated over three decades of service to Vidarbha Konkan Gramin Bank, the court held that leave encashment is not a mere favor from the employer, but a rightful entitlement of the employee.

Leave Encashment: A Right, Not a Bounty

The Division Bench of Justice Nitin Jamdar and Justice MM Sathaye emphasized that leave encashment should be considered as part of an employee’s salary and property. Depriving an employee of this property without a valid statutory provision would be in violation of Article 300 A of the Constitution of India. The court declared that if an employee has earned leave and chooses to accumulate it, the encashment of unutilized leave becomes their right.

The Petitioners’ Case

The petitioners, Dattaram Sawant and Seema Sawant, approached the court seeking the encashment of their privilege leaves, which had been rejected by Vidarbha Konkan Gramin Bank. After resigning from their positions, their superiors accepted their resignations and issued them experience certificates. However, when they requested the encashment of their credited privilege leave, the bank informed them that the facility for encashment had been established only after their resignation dates, thus denying them the benefit.

The Court’s Decision

The Court found the bank’s denial of encashment to be arbitrary and unsustainable. It emphasized that the accrued right to encashment cannot be dismissed by the bank. As a result, the Court ruled in favor of the petitioners, stating, “The refusal by the Respondent-Bank to extend the benefit of encashment of privilege leave is arbitrary and cannot be sustained.” The Court ordered the bank to calculate the amounts payable to the petitioners for leave encashment, along with interest at the rate of Rs.6% per annum, and directed them to make the payment within six weeks from the date of the ruling.

Conclusion

This ruling by the Bombay High Court serves as an important recognition of employees’ rights and entitlements. It establishes that leave encashment is not a discretionary benefit but a rightful claim that should be honored by employers. The decision provides clarity and protection to employees seeking their due benefits, ensuring that they are treated fairly and in accordance with the law.