What Is Earned Leave (EL)?

Earned Leave is also known as Privilege Leave ( PL) or Vacation Leave (VL). This leave type is named Earned because employee ‘earns’ these leaves for days they worked. It is also known as Annual Leave ( AL) or Flexi Holiday. This is one of the most common type of leaves in India.

As the name suggests, Earned Leaves are used for personal reasons such as festivals, vacations, etc, they cannot be used as sick leaves. These leaves are usually known as paid leaves. Providing EL is mandatory as per labor laws; however, the quantity of the EL varies from state to state and it is depended on the company leave policy, defined in your appointment letter. This leave entitlement is calculated as the number of days worked by the employee. The Days worked shall not include holidays & weekends.

You can understand this as per the guide of leaves, This sort of leave needs to be planned ahead of time and informed to HR in advance. These leaves are carried forward to next year as per your policy in the appointment letter– if they are not used by employees at the end of the year. Employee cans also encash their leave ( not included in fixed pay) through a process called Leave Encashment after the end of the year. The basic salary is usually considered as the unit of exchange to encash earned leaves in payslip.