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How Is Leave Encashment on Retirement Calculated?
The 300-Day Limit
- When you retire on reaching the normal retirement age, the leave sanctioning authority must, on its own (suo motu), order the cash equivalent of leave salary for both earned leave and half pay leave at your credit, up to 300 days (CCS (Leave) Rules 1972, Rule 39(2)(a), p. 30).
- The overall limit for encashment, including both earned leave and half pay leave, is 300 days (CCS (Leave) Rules 1972, Rule 39(2)(b), Note, p. 30).
- Half pay leave cannot be commuted to make up a shortfall in earned leave (CCS (Leave) Rules 1972, Rule 39(2)(c), p. 30).
- The amount is paid in one lump sum as a one-time settlement (CCS (Leave) Rules 1972, Rule 39(2)(b), p. 30).
The Formula
| Component | Formula |
|---|---|
| Earned leave | (Pay on the date of retirement + DA on that date) / 30 x days of unused earned leave (CCS (Leave) Rules 1972, Rule 39(2)(b)(i), p. 30) |
| Half pay leave | (Half pay leave salary on the date of retirement + DA on that date) / 30 x days of half pay leave (CCS (Leave) Rules 1972, Rule 39(2)(b)(ii), p. 30) |
Example: suppose your pay plus DA on the retirement date is Rs 90,000 and you have 300 days of earned leave. The cash equivalent is 90,000 / 30 x 300 = Rs 9,00,000.
If your earned leave is less than 300 days, half pay leave at credit fills the balance, because the total of both is capped at 300 days (CCS (Leave) Rules 1972, Rule 39(2)(b)(ii), p. 30).
Other Ways of Leaving Service
- Retirement by notice (yours or the government's): cash equivalent of earned leave and half pay leave up to 300 days, calculated the same way (CCS (Leave) Rules 1972, Rule 39(5), p. 31).
- Resignation: cash equivalent of earned leave only, up to half of the earned leave at credit, subject to a maximum of 150 days (CCS (Leave) Rules 1972, Rule 39(6)(a)(ii), p. 32).
- Death in service: cash equivalent of earned leave and half pay leave, up to 300 days, is paid to the family (CCS (Leave) Rules 1972, Rule 39-A, p. 32).
- Invalidation (declared completely and permanently incapacitated by a Medical Authority): up to 300 days (CCS (Leave) Rules 1972, Rule 39-B(1), p. 33). A person not in permanent or quasi-permanent employ does not get it for half pay leave (CCS (Leave) Rules 1972, Rule 39-B(2), p. 33).
When Payment Can Be Withheld, and LTC Encashment
- If you retire while under suspension, or while disciplinary or criminal proceedings are pending, the authority may withhold all or part of the cash equivalent of earned leave if money may become recoverable from you. After the proceedings end, you get the withheld amount after adjustment of government dues (CCS (Leave) Rules 1972, Rule 39(3), p. 31).
- Earned leave encashed with LTC during service (up to 10 days at a time and 60 days in the whole career) (CCS (Leave) Rules 1972, Rule 38-A(1), p. 28) is not deducted from the leave you can encash on retirement (CCS (Leave) Rules 1972, Rule 38-A(4), p. 29).
Where to Check
Read Rules 38-A, 39, 39-A, 39-B and 39-C of the CCS (Leave) Rules, 1972 in the DoPT consolidated copy updated as on 24.09.2024 (CCS (Leave) Rules 1972, Rule 39, p. 29).
These rules do not apply to Railway servants (CCS (Leave) Rules 1972, Rule 2(a), p. 3). KVS, NVS and Delhi Police staff should also check their own organisation's orders.
Related Questions
Does LTC leave encashment reduce my retirement leave encashment?
No. Earned leave encashed along with LTC is not deducted from the leave you can normally encash under Rule 39 and related rules (Rule 38-A(4)).
Can my leave encashment be withheld?
Yes. If you retire while under suspension or with disciplinary or criminal proceedings pending, the authority may withhold all or part of the earned leave encashment if money may become recoverable (Rule 39(3)).
How much leave can I encash if I resign?
Earned leave only, up to half of the earned leave at your credit, subject to a maximum of 150 days (Rule 39(6)(a)(ii)).
Who gets the leave encashment if a retiree dies before receiving it?
It is paid in the order set by Rule 39-C, starting with the widow (or husband), then the eldest surviving son or adopted son, then the eldest surviving unmarried daughter, and so on.
Do I need to apply for leave encashment on retirement?
On superannuation, the leave sanctioning authority must issue the order suo motu, meaning on its own (Rule 39(2)(a)).
Official Sources
- Central Civil Services (Leave) Rules, 1972 (updated as on 24.09.2024) ยท Department of Personnel and Training, Government of India
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This article explains the official rules as published; it is not legal advice. Check the cited document, and your own department's orders, before acting.