What Does The New Labour Law Says About Leave Encashment of Unused Annual Leave?

Can I encash my unused annual leave?

As per the New Labour Law there are certain conditions that need to be met before availing of encashment of unused annual leave.Opens in a new tab.

As per the Article 29 of the New Labour Law on Annual Leave clause 8 and 9:

  • The employer may not prevent the worker from benefiting from his annual leave accrued for more than two years, unless the worker wishes to carry it forward or receive a cash allowance for it, in accordance with the regulations in force at the establishment and the Implementing Regulation hereof.
  • The worker shall be entitled to a wage for the accrued leave days if he quits the work before using them, regardless of the leave duration, with respect to the period for which he did not obtain his leave. He shall also be entitled to receive leave wage for parts of the year in proportion to the period he spent in work and it shall be calculated according to the basic wage.

As per the Article (19) of Cabinet Resolution No 1 of 2022 – carrying forward annual leaves or Receiving cash allowance thereof:

  • The worker may carry forward not more than half of the annual leave to the following year, or he may agree with the employer to receive a cash allowance thereof, according to the wage he receives at the time of his entitlement to the leave.
  • If the worker’s service ends, he shall be paid a cash allowance for the balance of his legally due annual leave, according to the basic wage.


Human Resource professional and writer.

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