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Supreme Court Holds Leave Encashment To Be Part Of Salary

Bench of Chief Justice U.U. Lalit and S. Ravindra Bhat observed that, "The appellants are held entitled to privilege of leave entitlement benefits. Such benefit shall 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 shall pay the benefits due to the extent of 70 per cent and the balance 30 per cent shall be payable by the management establishment."

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The Supreme Court of India, on September 26, held that leave encashment was part of salary and that state could not shrug its responsibility to pay the share of leave encashment benefits.

Bench of Chief Justice of India UU Lalit and Justice S. Ravindra Bhat observed that the appellants were entitled to privilege leave entitlement benefits. 

The bench heard an appeal preferred against a judgment and order of the Rajasthan High Court whereby appellant's application seeking enforcement of Apex Court's previous decision was dismissed.

The appellants prayed for leave encashment benefits and payment of gratuity.

The Court observed that, "The appellants are held entitled to privilege of leave entitlement benefits. Such benefit shall 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 shall pay the benefits due to the extent of 70 per cent and the balance 30 per cent shall be payable by the management establishment."

The Court further held that it was the management of the aided institution which had to bear the liability towards payment of gratuity.

The appeal was allowed.


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