Leave Encashment is a Constitutional Right: Gujarat HC
The Gujarat High Court bench of Justice M.K. Thakker has ruled that depriving an employee of earned leave encashment violates constitutional rights. The court affirmed a labor court's order directing Ahmedabad Municipal Corporation to pay dues to a retired employee.
The Gujarat High Court has affirmed that depriving an employee of earned leave encashment constitutes a violation of constitutional rights. In a recent judgment, the court upheld a labor court’s order directing the Ahmedabad Municipal Corporation (AMC) to remit the dues to a retired employee.
Justice M.K. Thakker, who presided over the case, agreed with the labor court’s finding that earned leave encashment is equivalent to income and thus constitutes an employee’s property. The decision stressed that depriving an individual of lawful property without valid statutory grounds is a violation of fundamental rights. The court claimed, “If an employee has accrued earned leave and elected to accumulate it, the right to encashment becomes inviolable, and no authority can abrogate this right without lawful justification.”
The case involves a junior clerk who joined AMC in 1975 and retired on April 30, 2014. The AMC disallowed his earned leave encashment, alleging illegal leave after he submitted his resignation, making him ineligible for the benefit. The labor court found in favor of the employee and ordered the corporation to pay the leave encashment sum.
The Gujarat High Court rejected AMC’s argument and ordered compliance with the labor court’s decision. The court emphasized that employee perks, such as earned leave encashment, are accruing rights guaranteed by constitutional requirements.
Justice Thakker also stated that an employee’s leave encashment is equivalent to their wage and hence their property. Denial of earned leave encashment was interpreted as a breach of the employee’s constitutional rights.
AMC filed the case to challenge the labor court’s order to pay leave encashment to Sadgunbhai Solanki, a retired junior clerk. Justice Thakker dismissed the petition, upholding the labor court’s judgment and affirming that no employee’s leave encashment may be denied without a legitimate legislative cause. Employees have the right to collect and redeem their earned leave.
Solanki, who joined AMC in 1975 in the technical department and climbed to the rank of junior clerk by 2013, was relegated to the post of helper after failing a promotional exam. He submitted his resignation in March 2013, but it was not legally accepted for seven months due to the statutory one-month notice period. Solanki retired in April 2014, without his resignation being legally accepted.
When Solanki attempted to cash in his earned leave, AMC denied him payment, claiming that he had been on illegal leave following his resignation. Solanki was entitled to around Rs 2.80 lakh for earned leave.
The Gujarat High Court upheld Solanki’s fundamental rights to encash earned leave.
In a similar line, the Bombay High Court recognized in May 2024 that leave encashment is equivalent to wages and hence property under the law. The court concluded that depriving an individual of this property without a statutory provision violates Article 300A of the Constitution, which states that no person shall be deprived of property without legal authority. This verdict was delivered in response to a case of former workers of Vidarbha-Konkan Gramin Bank, who were refused leave encashment.. For further insights into the evolving workplace paradigm, visit
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