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New Labour Codes 2026: Under the new Labour Codes, you will now be able to receive direct cash payments in exchange for your remaining or unused leave. Previously, one had to wait until retirement to avail of this benefit.

New Labour Codes 2026: When joining a company or organization, employees are typically informed about their annual leave entitlement; however, in reality, work pressure is often so intense that people are unable to utilize their full quota of leave. Consequently, these leave days often expire unused. However, this will no longer be the case. The Central Government has introduced significant changes to the rules regarding 'Leave Encashment' under the new Labour Codes.

Under these new provisions, employees will now be able to encash their surplus leave days every year. According to the old rules, encashing remaining leave was generally permitted only at the time of retirement or upon resigning from a job; this restriction has now been lifted. This comes as welcome news and a source of relief for employees.

What is the New Rule?

Thanks to this pivotal change introduced under the new Labour Codes, employees can now encash their remaining leave days at the end of the financial year. It is worth noting that, under the Occupational Safety, Health and Working Conditions (OSH) Code, 2020, an employee may carry forward a maximum of 30 days of 'Earned Leave' to the following year.

If your accumulated leave balance exceeds 30 days, the company is required to compensate you financially for those additional days. For instance, if you have 45 days of leave remaining by the end of the year, 30 days will be carried forward to the next year, while you will receive a cash payout for the remaining 15 days.

Additional Provisions Included in the New Rules:

Suppose you have applied for leave, but your supervisor or boss has denied your request; in such a scenario, those specific leave days will *not* be counted towards the aforementioned '30-day limit.' The company must settle all Full and Final (F&F) accounts related to an employee's resignation within two days (48 hours).
Previously, it was mandatory to complete 240 days of service to become eligible for 'earned leave'; however, you will now be entitled to accrue leave—and encash it—after just 180 days.