7th CPC Leave Encashment

The 7th Central Pay Commission has recommended in its report (Page No. 365) as follows…

Earned Leave (EL) or Leave on Average Pay (LAP)

Presently 30 days EL per annum is granted to Civilian employees and 60 days to Defence personnel. EL can be accumulated for up to 300 days in addition to the number of days for which encashment has been allowed along with LTC. Suggestions have been made to increase the accumulation to 450 days, allow encashment of 50 percent of the accumulated EL after 20 years of service and unlink encashment of leave from LTC. A novel concept of “gifting” has been put forward, wherein employees should be allowed to ‘gift’ a certain number of days of leave to one’s spouse or one’s colleague. “Vacation” staff like teachers, principals, etc. have demanded the restoration of 10 days EL, which was changed to 20 days Half Pay Leave by VI CPC.

Analysis and Recommendations in 7th CPC Report

In many organizations, employees are encouraged to take leave on the premise that it revitalizes them and is beneficial for the organization in the long run. Such a system is not prevalent in the government sector in India, but substituting leave with cash is also not desirable. Hence, no change in encashment guidelines is recommended.

The Commission recognizes that Earned Leave is, as the name suggests, earned by an employee through the services rendered. Hence, it is personal to the employee and the concept of “gifting” cannot be considered.

The demand of “Vocational” staff can, however, be agreed to. Hence, it is recommended that “Vocational” staff be granted 10 days EL in place of 20 days Half Pay Leave. Other than this no other change is recommended.

Half Pay Leave (HPL) or Leave on Half Average Pay (LHAP)

Presently, government employees are entitled to 20 days of Half Pay Leave for each completed year of service, credited @10 days on the 1st of January and 1st of July every year. There are representations that encashment of HPL should be allowed at the time of superannuation.

Analysis and Recommendations in 7th CPC Report

The demands lack merit. Elsewhere in the report, it has been recommended that 20 days HPL granted to “Vocational” staff be converted into 10 days EL. Hence, HPL will henceforth not be available to them. No change other than this is recommended.

Leave Encashment permitted at the time of retirement:

• 4th Pay Commission: 240 days
• 5th Pay Commission: 300 days
• 6th Pay Commission: 300 days*

*Excludes 60 days EL encashment during LTC

Enhancement of ceiling of Earned Leave for purposes of Leave Encashment

10.1.44 The Commission has received representations seeking to raise the ceiling limit from 300 days to 450 days for purposes of Leave encashment.

Analysis and Recommendations in 7th CPC Report

10.1.45 The Commission notes that based on the recommendations of the VI CPC, serving employees are entitled to encashment of Earned Leave up to 60 days while in service. This is not to be deducted from the maximum number of Earned Leave of 300 days encashable at the time of retirement. The VI CPC, therefore, has further liberalized the regime of leave encashment.

10.1.46 The recommendations in relation to pay of both the civilian and defence forces personnel will also lead to a significant increase in the pay drawn and therefore in the total amount of leave encashment available for an employee. Therefore raising the present ceiling of 300 days is not recommended by the Commission.

Leave Encashment with LTC

Whether encashment of leave is allowed after LTC is availed?

• Sanction of leave encashment should, as a practice, be done in advance, at the time of sanctioning the LTC. However, ex-post facto sanction of leave encashment on LTC may be considered by the sanctioning authority as an exception in deserving cases within the time limit prescribed for submission of claims for LTC.

What is the limit of leave encashment while availing LTC by Government servants, dependents, or spouse within the same block year?

• The Government servants governed by the CSS (Leave) Rules, 1972, and entitled to avail LTC may encash earned leave up to 10 days at the time of availing both types of LTCs., i.e., `Hometown’ and `Anywhere in India’. However, when the one and the same LTC is being availed of by the Government Servant and his family members separately in a block year, encashment of leave would be restricted to one occasion only.

Whether leave encashment should be revised on the retrospective revision of pay/D.A?

• In terms of 38-A of CCS(Leave) Rules, encashment of EL along with LTC is to be calculated on pay admissible on the date of availing LTC and DA admissible on that date. If pay or DA admissible has been revised with retrospective effect, going by the rule the Govt. servant would be entitled to encashment of Leave on the revised rates.

Encashment of Earned Leave

Whether earned leave encashment allowed by the State Governments, PSUs, Autonomous Bodies to Govt. servant prior to his joining the Central Govt. is to be taken into account while calculating ceiling of leave encashment on his superannuation and retirement from Central Govt.?

• Encashment of EL allowed by the State Governments, Public Sector Undertakings/Autonomous Bodies for services rendered therein need not be taken into account for calculating the ceiling of 300 days of Earned leave to be encashed as per CCS (Leave) Rules.

Whether cash equivalent of leave salary in case of permanent absorption in PSU/Autonomous Body is permissible?

• A Government servant who has been permitted to be absorbed in a Corporation/Company wholly or substantially owned or controlled by Central/State Government shall be suo-motu granted cash equivalent of leave salary of earned leave at his credit on the date of absorption subject to a maximum of 300 days (being calculated as per provisions of rule 39) {Rule 39-D) Permanent absorption under the rule shall mean such appointment for which the Government servant applied through proper channel and resigned from Government service for taking up of such appointment — {Note below rule 39-D — Notification No. 13026/3/2011-Estt.(L) dated 28-03-2012 )

Leave Encashment on Suspension/Dismissal/Removal

Whether leave encashment can be sanctioned to a Govt. servant on his superannuation while under suspension?

• Leave encashment may be allowed in such cases. However, Rule 39(3) of CCS (Leave) Rules, 1972 allows withholding of leave encashment in the case of a Govt. servant who retires from service on attaining the age of superannuation while under suspension or while disciplinary or criminal proceedings are pending against him if in view of the authority there is a possibility of some money becoming recoverable from him on conclusion of the proceedings against him. On conclusion of the proceedings, he/she will become eligible to the amount so withheld after adjustment of Government dues, if any.

Whether leave encashment can be sanctioned to a Govt. servant on his dismissal/removal, from service?

• A government servant, who is dismissed/removed from service, ceases to have any claim to leave at his credit from the date of such dismissal, as per rule 9(1). Hence he is not entitled to any leave encashment.

Interest on Leave Encashment

Whether interest is payable on delayed payment of leave encashment dues?

• No. There is no provision in the CCS (Leave) Rules 1972 for payment of interest on leave encashment.

7th CPC Recommendations on Encashment and Accumulation of Earned Leave – Click to read more

Earned leave settlement calculation Example: The Encashment Table of 300 days Earned Leave for the pay matrix level – 6 (4200 Grade Pay):

Encashment Leave Rules and Orders:

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Calculation Method with Formula for Encashment of Leave