Carry Forward

What is Carry Forward?

Carry Forward refers to the process of transferring an employee’s unused leave balance from one year to the next. This concept allows employees to retain their unutilized leave quota and use it in the following year. The leaves carried forward are often referred to as earned leaves or privilege leaves (PL) and are subject to specific rules set by company policies or labor laws, such as the Shop and Establishment Act.

Key Features of Carry Forward:

  • Earned Leaves (EL):

    • Leaves carried forward are typically categorized as earned or privilege leaves.

    • These can be accumulated over time, often up to a maximum limit (e.g., three years, depending on state regulations).

  • Encashment:

    • Earned leaves are encashable, allowing employees to receive payment based on their basic salary for unused leave when they exit the organization or during special leave encashment periods.

  • Policies and Conditions:

    • Companies usually define how many leaves can be carried forward (e.g., a cap on days).

    • Requests to take earned leaves typically need to be submitted in advance, such as 15 days before the planned leave.

    • The policy regarding carryforward may vary based on industry norms or local labor laws.

Benefits of Carry Forward:

  • Flexibility for Employees: Allows employees to save their leaves for future use, such as longer vacations or emergencies.

  • Motivation and Retention: Acts as an employee-friendly policy, contributing to satisfaction and retention.

  • Financial Benefit: Employees can encash unused leave, providing them with additional monetary benefits.

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