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Annual Leave encashment

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Annual Leave encashment

Postby revhappy » Mon, 12 Sep 2011 5:23 pm

Hello Guys,

Couple of months ago, I was absorbed into the permanent payrolls of the bank that I am working and hence my employment with the vendor with whom I was employed got terminated.

In my Full and Final settlement, I was expecting to have my Annual leaves that I had not taken during the current year to be encashed.

But the HR says that as a policy they do not allow leave encashment.

My offer letter reads that "If an employee leaves the company before completion of 2 years, there wont be any encashment of annual leaves". But I have already completed 2 years with the vendor, so the above statement means that I am eligible for the leave encashment.

About a year ago, the company sent out a revised leave policy which had the following:

Carry Forward Leaves :
A maximum of 5 earned leaves can be carried forward to the next calendar year.
Please Note : All other leaves mentioned below would be forfeited incase they are not
consummated in the same year and there would be no leave encashment for any leaves.

 Paternity Leaves
 Childcare Leaves
 Maternity Leaves
 Compensatory Leaves
 Sick Leaves


The HR is telling me that the above bold statement means that there wont be any annual leave encashment. But if you read the entire line again its not exactly clear whether the context is annual leaves or the other leaves.

I had look at what MoM says:

http://www.mom.gov.sg/employment-practi ... fault.aspx

If the termination of an employee's service is not on account of misconduct, the employer must pay him/her for every day of leave not taken, at the gross rate of pay based on the employee's last drawn salary.


From the above, I believe I have a very strong case here. I have 15 days of leaves to be encashed which includes 5 days carried forward from previous year and at my gross salary rate it amounts to $4400 which is not a small amount.

Any suggestions welcome.

TIA,
Revhappy.

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Postby sundaymorningstaple » Mon, 12 Sep 2011 7:52 pm

By law, you are entitled to your annual leave when you resign or otherwise finish your contract. The have to pay you the cash equivalent of your salary for every day of accumulated annual leave. All the other statutory leaves like holiday, medical, child care and such are a use is or lose it based on the calendar year. None of them can be carried forward, nor are they encashable. Only annual leave is either encashable or you can have your notice shortened by the same. The problem with taking short notice is that both the employer & employee have to agree on it. One side cannot unilaterally decide it. Or you can take leave till your last day. Problem with that is that you cannot go to work with another company till your notice (leave or not) is up. The employer does not have to cancel your EP until your last official day of work (whether on leave or not). Be advised that annual leave is not granted in full on January 1st for the entire year, but it's accrued monthly with most companies rounding up on the 16th, but not necessarily.

Tell the employer that you are going to take it up with the MOM. They'll hem & haw for a while and then capitulate. :cool:

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Postby revhappy » Mon, 12 Sep 2011 9:13 pm

Thanks SMS :)

In our case we both agreed for a short notice period of 1 month(In the contract it was 2 months) but when we spoke about the notice period we didnt discuss about leave encashment.

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Postby sundaymorningstaple » Mon, 12 Sep 2011 10:07 pm

It sounds like their intention was to offset notice with the leave. Apparently it wasn't clear from them or possibly your understanding of what they were implying. But, if they agreed to short notice it sounds like they were taking into consideration the accrued a/l to offset the second month.

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Postby desfoo » Sat, 24 Sep 2011 11:06 am

hi guys,

I have tendered my resignation and would like to use the remaining days of leave for a break before I start my new job. I am now serving my one month's notice period.
However, the company has rejected my leave, saying there is a lack of manpower and they will in turn, encash my leave. Do they have the right to do that?

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Postby sundaymorningstaple » Sat, 24 Sep 2011 1:01 pm

The short answer to you question is: Yes they do.

The longer answer is:

Unless agreed upon before tendering your resignation, yes they can do that. The Notice Period, as such, is designed to give the employer a chance to find a replacement and to give you the time to get your replacement up to speed so that the employer doesn't lose time by your departure.

In theory, anyway, it is figured that the longer you work for a company, the longer is will take for you to transfer you ever increasing workload as you got more proficient, to the new worker, you cannot do that if you are not there. It's also why MOM says in the first 6 months, only 1 day notice is required but after 6 months up to two years a week is required. After two years 2 weeks are required.

However, in the case of foreigners on other than WP's or WP's earning more than 20K/per year, they are required to give one month's notice because of IRAS. IRAS requires 1 month advance notice so that tax clearance (IR-21) can be timesly filed and the taxes, if any, paid before you last salary so that the employer is assured of being able to pay your taxes before your last salary as it is to be deducted from your last salary before you leave.

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Postby revhappy » Sat, 01 Oct 2011 9:08 pm

Hi SMS,

Just wanted to update, The HR of my previous company have finally agreed for the the Annual leave encashment, abeit after a bit of hemming and hawing ;)

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Postby sundaymorningstaple » Sat, 01 Oct 2011 10:19 pm

Waddidisay! :wink:


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