Resignation Does Not Entitle Employees To Claim Leave Encashment: Kerala HC

The Kerala High Court ruled that an employee who quits the service due to retirement, voluntary or otherwise, or resignation has no vested/inherent right to seek leave encashment unless otherwise permitted by statute or by norms or rules governing working conditions.

The Division Bench, comprised of Justice Alexander Thomas and Justice C. Jayachandran, issued the judgement while hearing an appeal against a Single Judge’s decision ordering a corporation to pay out leave encashment to a resigned employee. According to the court, retirement, whether voluntary or through superannuation, is a requirement for receiving the benefit of earned leave under existing norms and laws. Because the employee in question resigned before the age of 55, his resignation could not be considered voluntary retirement.

The court ordered the corporation to pay the employee’s accrued leave encashment with interest within two months of the judgment date. The employee, who had worked for the company for 21 years, quit and sought to use earned leave. Despite being told of the entitlement, the corporation did not pay it, and the employee’s complaints remained unanswered.

The court noted that the case involved employees who were covered under the General Insurance (Termination, Superannuation, and Retirement of Officers and Development Staff) Scheme, which was enacted in 1976. The system permits retirees or those who voluntarily retire to cash in their earned leave, with some exceptions.