As per the Karnataka Shops and Commercial Establishments Act, every employee is entitled to annual leave with wages at the rate of one day for every twenty days of work performed by an adult employee and one day for every fifteen days of work performed by a young person.
In a given year, an employee earns around 18 days of annual leaves.
Unlike other types of leave, the unused annual leave balance does not lapse at the end of the year. It will be carried forward to the following year.
Till now, an employee could carry forward a maximum of 30 days of annual leave balance. Beyond this limit, the leaves would lapse. If the employer so desires, the excess leave balance over and above the maximum carry forward limit can be converted to cash instead of letting it expire.
The Karnataka Government amended this provision and enhanced the carry forward limit to 45 days.
The accumulated leave encashment will be based on the prevailing rates of wages as on the date of encashment. The employers have to make the required changes in their internal leave policy. If an employer is already providing a better leave accumulation policy, there is no restriction.