Employee’s leave encashment is just like their salary, and therefore, their property, observed the Gujarat High Court. According to the Court, denying their earned leave encashment tantamount to violating the employee’s constitutional right.
The petition was filed by the Ahmedabad Municipal Corporation (AMC) against a labour court’s order to pay leave encashment to a retired employee, Sadgunbhai Solanki, a junior clerk.
As per a ToI report, Justice MK Thakker dismissed the petition upholding the labour court’s directive saying no employee’s leave encashment can be held back without a valid statutory provision. Employees are free to accumulate their earned leave and it is their right to encash the same.
Solanki had reportedly joined the Corporation in 1975 in the technical department. While he had become a junior clerk by 2013, he was demoted to the role of helper when he failed to pass a promotional exam of the department. He resigned in March 2013, but his resignation was not officially accepted for seven months, saying it was mandatory to give a one-month notice period for acceptance of resignation. With the matter being left unresolved, Solanki retired in April the next year, that is, 2014.
However, when Solanki tried to encash his earned leave, the Corporation refused to do so. Solanki was due to be paid about Rs 2.80 lakh towards earned leave. The Corporation maintained that Solanki had been on unauthorized leave post putting in his resignation.
The Gujarat HC, however, ruled in Solanki’s favour protecting his entitlements under the Constitution.
In May 2024, the Bombay High Court had also affirmed that leave encashment is akin to a salary, which constitutes property under the law. The Court had, at the time, stated that depriving a person of this property without statutory provision violates Article 300A of the Constitution, which ensures no person is deprived of property without legal authority. This decision came in response to a case involving former employees of Vidarbha-Konkan Gramin Bank, who were denied leave encashment.
