Government employees are entitled to get cash payment in lieu of unutilized earned leave on the date of retirement - the benefit is generally termed as Leave Encashment. It is paid as cash equivalent of leave salary in respect of period of earned leave at their credit at the time of retirement on superannuation. The cash equivalent of leave salary thus admissible will become payable on retirement and will be paid in one lump sum as a one time settlement.
Cash payment will be equal to leave salary as admissible for earned leave and dearness allowance (DA) admissible on that leave salary at the rates in force on the date of retirement. No HRA and MA shall be payable.
The authority competent to grant leave shall issue order granting cash equivalent of earned leave at credit on the date of retirement.
Employees under premature / voluntary retirement are also entitled to get the benefit of Leave Encashment but NOT for those who are compulsorily retired as a measure of punishment under disciplinary rules.
Benefit of Leave Encashment is also provided to the dependants of an Govt. servant who dies while in service.
