Leave Encashment for Central Government Employees

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)

9.2.13 Presently 30 days EL per annum is granted to Civilian employees and 60 days to Defence personnel. EL can be accumulated 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 delink encashment of leave from LTC. A novel concept of “gifting” has been put forward, wherein employee should be allowed to ‘gift’ certain number of days of leave to one’s spouse or one’s colleague. “Vacational” staff like teachers, principals, etc. have demanded restoration of 10 days EL, which was changed to 20 days Half Pay Leave by VI CPC.

Analysis and Recommendations in 7th CPC Report

9.2.14 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.

9.2.15 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.

9.2.16 The demand of “Vacational” staff can, however, be agreed to. Hence, it is recommended that “Vacational” 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)

9.2.21 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

9.2.22 The demands lack merit. Elsewhere in the report it has been recommended that 20 days HPL granted to “Vacational” 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 raising the ceiling limit of 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 for 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 liberalised 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.

How is earned leave encashment calculated while retirement?

The amount of leave encashment will be calculated as follows:

Earned Leave Calculation Formula

• [(Basic Salary + DA) / 30] x No of days

Hal Pay Leave Calculation Formula

• [(Half Pay Leave Salary + DA) / 30] x No of days

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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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• Payment of leave encashment in respect of VRS-2019 optees whose Vigilance clearance is withheld May 9, 2020
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• Leave encashment to officers appointed on contract in various posts under Government – DoPT June 21, 2019
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• Clarification in respect of encashment of Earned Leave to reemployed pensioners – DoPT July 4, 2017
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• Cabinet approved leave encashment up to 180 days to Defence personnel April 19, 2017
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• 7th Pay Commission Report on Leave Encashment of EL December 12, 2015
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• IBA Clarification on Paternity Leave, Encashment on LFC, Re-fixation of Pay and Special Allowance July 28, 2015
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• One time relaxation in Rules for leave encashment during service January 12, 2015
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• One time relaxation for leave encashment during service: Railway Board Order December 24, 2014
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• Timely payment of dues of encashment of leave to Government servants retiring on attaining the age of superannuation… October 25, 2013
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Calculation Method with Formula for Encashment of Leave