Home » The Supreme Court has held that leave encashment is part of the salary. The Court held that the condition in Rajasthan Voluntary Rural Education Service – 27th September 2022
The Supreme Court has held that leave encashment is part of the salary. The Court held that the condition in Rajasthan Voluntary Rural Education Service
Contents News/Article Date: 27th September 2022
Relating to which Act: The Payment of Wages (Amendment) Act, 1957 (68 of 1957). 9. The Payment of Wages (Amendment) Act, 1964 (53 of 1964).
Type: Supreme Court Judgement – The Apex Court bench of CJI Uday Umesh Lalit and S. Ravindra Bhat noted in their judgment
Pertains to: Employers and Employees who are eligible
Relevance of this news: Karma Management Global Consulting Solutions Pvt. Ltd has been in the business of Payroll, Outsourcing, and Regulatory Compliances from its inception in 2004 and since then, has brought in a lot of efficiencies and technological upgradations with experts on its roll, to ease the hassles of Payroll Processing, Temp Staffing On-boarding Management, Regulatory and Payroll compliances by providing customized solutions to all its elite clients.
Karma Global is into Outsourcing and HR Services as well where it deals with the compensation, full and final settlement of all its outsourced as well as internal staff totaling over 7000 in numbers. The Payroll team of Karma which does the payroll processing for all its staff as well as the payroll processing for all its external clients is well versed with all the procedures and practices and goes strictly by the rules and regulations that are laid down from time to time.
The Government has vide notification dated August 28, 2017, revised the salary threshold for the applicability of the Payment Wages Act, 1936 (“Wages Act”) from Rs. 18,000/- (Rupees Eighteen Thousand Only) per month to Rs. 24,000/- (Rupees Twenty Four Thousand Only) per month. Consequently, the provisions contained under the Wages Act will now be applicable to employees earning wages up to Rs. 24,000/- (Rupees Twenty Four Thousand Only) per month, covering a significantly larger number of employees within the purview of the Wages Act.
The Wages Act regulates the payment of wages to persons employed in factories, railways, industries, and other establishments specified under the Wages Act. It contains provisions with respect to the responsibility for payment of wages, fixing of wage periods, time of payment of wages, permissible deductions, maintenance of records and registers, and penal consequences for non-compliance with the provisions stipulated under the Wages Act.
Subject: The Supreme Court has held that leave encashment is part of the salary. The Court held that the condition in Rajasthan Voluntary Rural Education Service
For greater details, appended below is the complete news item
Gratuity and leave encashment are components of salary: SC
The Rajasthan High Court had earlier dismissed the plea of the petitioners saying that gratuity and leave encashment were not covered under the term salary
The Supreme Court has held that leave encashment is part of the salary.
According to the Supreme Court, gratuity and leave encashment are components of the salary. This ruling went against the argument of the advocate representing the respondents who said that as per Rule 10 of the Rajasthan Voluntary Rural Education Service Rules, 2010 or under the Rajasthan Non-Government Educational Institutions (Recognition Grant-In-Aid and Service Conditions, Etc.) Rules, 1993, balance privilege leave could not be carried forward.
The apex court maintained that the condition in the Rajasthan Voluntary Rural Education Service Rules, 2010 barring carry forward of balance privilege leave is not only arbitrary but also unacceptable, and therefore, cannot be enforced. According to the report, the petitioners were appointed by a senior secondary school in 1993, to fill sanctioned posts. When they had sought gratuity and leave encashment, the Rajasthan High Court dismissed their plea saying that the two were not part of the term ‘salary’ as per Rule 10 mentioned above.
Senior Advocate Deepak Nargokar, who represented the petitioners referred to the decision in the State of Rajasthan and Anr. v. Senior Higher Secondary School, Lachhmangarh 2005 (10) SCC 346 wherein was ruled that leave encashment had “to be read and understood with the definition of the word salary”.
The Apex Court bench observed that the term ‘salary’ includes leaving encashment, which is simply salary paid to the employee for the leave that he or she has not availed.
The Court declared that the appellants are held entitled to the privilege of leave entitlement benefits” and that these benefits should be “calculated from the date they entered the service of the establishment till the date of their absorption, by the State, in 2016”.
The State has been directed to pay them benefits due to the extent of 70 percent, with the remaining 30 percent to be paid by the management establishment.