HC Rules Encashment of Leave is a Right, Denying it Violates Constitutional Protections

The Gujarat High Court has ruled that leave encashment is akin to salary, and depriving an employee of earned leave encashment is a violation of constitutional rights. The ruling came as the court dismissed a petition by the Ahmedabad Municipal Corporation (AMC) against a labour court's order directing it to pay leave encashment to a retired employee.

HC's Key Observations
Justice M.K. Thakker, while upholding the labour court's decision, stated:
•    Encashment of leave is an employee’s right, and withholding it without valid statutory provisions violates the Indian Constitution.
•    Leave encashment is considered property, and an employee cannot be deprived of it arbitrarily.
•    If an employee has accumulated leave and chosen to encash it, the employer must honor this right.

Case Background
•    Sadgunbhai Solanki had joined AMC as a technical department employee in 1975.
•    In 2013, he was demoted to a helper’s post due to his failure to clear a departmental promotion exam.
•    He resigned on March 5, 2013, but AMC delayed its response for seven months.
•    He was superannuated on April 30, 2014, without the issue being resolved.
•    Solanki demanded his leave encashment, which amounted to ₹2.80 lakh, but AMC refused the payment, arguing that he was on unauthorized leave.

Final Verdict
The HC dismissed AMC's petition, directing it to pay the pending leave encashment to Solanki. This ruling sets a strong precedent for employee rights, reinforcing that leave encashment is a legally protected benefit and cannot be arbitrarily denied by employers.