Privilege leave means the leave given to the employees for their service to the company. Privilege leave is also called “Earned leave”. Employees can use these leave whenever they want to take a planned leave (or) these can be converted into cash (or) can be carried forward to next year.
The number of privilege leaves (earned leaves) given by the company depends on the “state in which they are operating their business” and also the “act applicable to that business”.
Nowadays most companies are covered under the shops and commercial establishment act, every state has its own shops and establishment act.
How Many Privilege Leaves Per Year
If your company is covered under the shops and commercial establishment act then the number of privilege leaves depends on your state’s respective shops and establishments act.
In most cases, companies will grant 15-20 days privilege leaves per year and you should apply for the leave before 7-15 days of taking the leave.
No of Privilege Leaves Per Year
|S No||State||EligibleAfter||No. of Privilege Leaves||Maximum Privilege leaves Accumulated||Leave intimation|
|1||Andhra Pradesh||After 240 days of continuous service||15||60||7 days before taking leave|
|2||Assam||After 12 months of continuous service||1 leave for every 20 days of work.||45||15 days before taking leave|
|3||Bihar||After 240 days of continuous service||16||30||–|
|4||Chhattisgarh||After 12 months of continuous service||30||90||–|
|5||Gujarath||After 240 days of continuous service||21||63||–|
|6||Himachal Pradesh||After 20 days of continuous service||1 leave for every 20 working days||40||–|
|7||Jammu & Kashmir||After 12 months of continuous service||30||90||–|
|8||Jharkhand||After 240 days of continuous service||1 leave for every 20 working days||–||15 days before taking leave|
|9||Karnataka||After 12 months of continuous service||1 leave for every 20 working days||30||10 days before taking leave|
|10||Kerala||After 12 months of of continuous service||12||24||–|
|11||Madhya Pradesh||After 12 months of continuous service||14||90||–|
|12||Maharashtra||After 240 days of continuous service||21||42||–|
|13||Meghalaya||After 12 months of continuous service||16||30||–|
|15||Nagaland||After 12 months of continuous service||16||30||7 days before taking leave|
|16||Odisha||After 240 days of continuous service||1 leave for every 20 days of work (Holidays should not be included)||30||–|
|17||Punjab||After 20 days of continuous service||1 leave for every 20 days of work (Holidays should not be included)||40||–|
|18||Rajasthan||After 240 days of continuous service||1 leave for every 12 days of continuous service||30||7 days before taking leave|
|19||Tamil Nadu||After 12 months of continuous service||12||24||–|
|20||Telangana||After 240 days of continuous service||15||60||7 days before taking leave|
|21||Tripura||After 12 months of continuous service||15||56||–|
|22||Uttar Pradesh||After 12 months of continuous service||15||45|
|23||Uttarakhand||After 240 days of continuous service||1 leave for every 20 days of work (Holidays should not be included)||45|
|24||West Bengal||After 12 months of continuous service||14||28|
Privilege Leaves As per Factories Act 1948
(Factory means the premises where the manufacturing works take place with or without the aid of power.)
If your company comes under the factories act 1948 then you will become eligible for privilege leaves after 240 working days of continuous service in a calendar year (1 Jan to 31 Dec). For every 20 working days (excluding holidays) you will get 1 privilege leave.
The maximum unused privilege leaves can be accumulated is 30 days.
Privilege Leave Encashment
Most companies calculate leave encashment on basic wage + DA, companies can pay even on gross salary as well, it is their own choice. (But there is no certain rule in factories act or shops & establishment act to calculate leave encashment on basic wage or gross wage)
Privilege leave encashment calculation formula:
(Basic salary + Dearness Allowances/26) X No.of Privilege Leaves.
Note: If there is no DA in your company then ignore it in the calculation.
Privilege Leave Encashment Calculation Example:
If a person has 60 accumulated privilege leaves, and his last 10 months basic wage + DA is 30,000 Rs, then the leave encashment will be calculated as follows:
(30000/26)*60 = 69,230 RS
Therefore that person will get a privilege leave encashment amount of 69,230 Rs.
Reason to Apply for the Privilege Leave
- Long vacation (or) recreation activities.
- Marriage of self (or) family members.
- Health related issues of self or family members.
- To prepare for exams.
- Incase of any emergency etc.
But make sure that your reason to apply for privilege should be professional and agreeable, don’t apply them just for the sake of it, use them whenever you really need them, otherwise carry forward them or you will be paid as cash.
When should I take a leave?
Whenever you want to take a planned leave for more than 5 days then you can apply for privilege leaves with prior intimation.
What is the difference between privilege leave and casual leave?
Casual leaves can be taken on an urgent basis for half-day to 2 days whereas privilege leave can be taken for more than 5 days.
What if I leave my job even before completing the eligibility period?
Companies will pay the amount for your earned privilege leaves, you will get that amount with your full and final settlement. For example, if you are granted only 5 Privilege leaves then the company will pay full salary for those 5 PLs during F&F settlement.
Can privilege leave be denied?
As an employee you should take with approval only, If your employer is not approving your privilege leave request without any valid reason then you can proceed legally.
What is the full form of PL leave?
PL leave means privilege leave, it is also called earned leaves or annual leaves.
Will Privilege leave / earned leaves lapse?
Yes, if the limit of the accumulated earned leaves crosses the maximum limit set by your state’s shops and establishment act then they will lapse. So it is better to use them before crossing the maximum accumulation limit.
But every company has its own policy when it comes to lapsing the earned leaves, some companies lapse them, and some do not. So before making a decision to use them or leave them, it is better to contact your HR department.
How much tax should I pay on leave encashment of PLs?
It depends on Two cases,
i) if you want to encash your leaves before your retirement then the leave encashment is taxable for both govt and private sector employees, it will be considered as your salary.
ii) During retirement leave encashment is tax-free for govt employees. (Both state & central).
And for private-sector employees, they can get tax exemption up to 3,00,000 Rs (or) actual leave encashment amount (or) last 10 months basic salary + DA (or) cash equals to the no. of privilege leaves he/she gets every year. (whichever the amount is lower it will be considered for tax exemption).