New Labour Codes 2026: Under the new labour codes, you will now be able to receive a direct cash payout in exchange for your accumulated or unutilized leave. Previously, however, one had to wait until retirement to avail of this benefit.
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New Labour Codes 2026: At the time of joining a company or organization, employees are often informed about their annual leave entitlement; however, in reality, the immense pressure of work often prevents them from utilizing their full quota of leave. Consequently, these leaves frequently expire without ever being utilized. However, this will no longer be the case. Under the new Labour Codes, the Central Government has introduced significant changes to the rules regarding leave encashment.
According to these new provisions, employees will now be able to encash their accumulated surplus leave every year. Under the previous regulations, the encashment of unutilized leave was generally permitted only at the time of retirement or upon resignation; however, this restriction has now been lifted. This comes as welcome news and a source of relief for employees.
What is the New Rule?
Thanks to this significant change introduced under the new Labor Code, employees can now encash their remaining leave at the end of the year. It is worth noting that, under the Occupational Safety, Health and Working Conditions (OSH) Code, 2020, an employee can carry forward a maximum of 30 days of earned leave to the following year at the end of the current year.
If you have more than 30 days of remaining leave, the company will be required to pay you for those additional days. For instance, suppose you have 45 days of leave remaining by the end of the year; in this scenario, 30 days will be added to your leave balance for the next year, and you will receive monetary compensation for the remaining 15 days.
These points are also included in the new rules:
- Suppose you have requested leave, but your boss has denied it; in such a case, this instance will not be counted towards the ’30-day limit.’
- Following an employee’s resignation, the company must settle all ‘Full and Final’ (F&F) accounts within two days (48 hours).
- Previously, completing 240 days of service was mandatory to become eligible for ‘earned leave’; however, you will now be entitled to accrue leave—and encash it—after completing just 180 days.
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