Can a government servant re-employed after retirement claim leave encashment again?

The Supreme Court of India recently delivered an important judgment regarding the leave encashment policy for government servants in Sikkim. The case dealt with whether a government servant who is re-employed after retirement can claim leave encashment again if they had already availed the maximum limit of 300 days before their retirement.

Key Points of the Ruling

The Court clarified that once a government servant has received the maximum benefit of 300 days’ leave encashment at the time of their retirement, they are not entitled to claim leave encashment again during their re-employment period. This ruling came after the government found that some re-employed individuals were improperly receiving additional leave encashments.

Understanding Leave Encashment

Leave encashment is a welfare measure for government employees, allowing them to receive a monetary benefit in exchange for unused leave days. This principle is intended to ensure that employees are compensated for the leave they have earned but could not take during their regular employment.

However, the Supreme Court emphasized that the policy should not be abused, especially at the expense of public funds. The government is not obligated to provide leave encashment multiple times for the same accumulated leave.

Background of the Case

The respondent in this case had worked as a Medical Advisor and Chief Consultant at a hospital in Gangtok, Sikkim. He retired in January 2005, at the age of superannuation, and received leave encashment for a maximum of 300 days of unused leave. After retirement, he was re-employed in the same position, and his contract was extended several times until 2019.

In 2019, the respondent was granted additional leave encashment for the re-employment period. However, the Sikkim government later issued an office memorandum (OM) in February 2020, stating that leave encashment could only be given once, during initial retirement, and not during re-employment.

The respondent challenged this decision, arguing that the leave encashment should apply to him, as it had been provided to others in similar situations. The High Court initially ruled in favor of the respondent, but the government appealed, leading to the Supreme Court’s final decision.

Legal Interpretation of Rules 32 and 36

At the heart of the case was the interpretation of two key provisions of the Sikkim Government Service Rules:

• Rule 36: This rule allows government servants to receive leave encashment for unused leave, up to a maximum of 300 days, when they retire.
• Rule 32: This rule applies to government servants who are re-employed after retirement and treats them as if they were entering government service for the first time.

The Court noted that while Rule 36 applies to government servants at the time of their initial retirement, it does not extend to those who are re-employed. Rule 32 applies to re-employed government servants, but it does not automatically entitle them to additional leave encashment.

Court’s Findings

The Court carefully examined both rules and concluded that:

• Rule 36 is specifically for employees who retire at the age of superannuation (58 years), and it applies only once at the time of retirement.
• Rule 32, which deals with re-employed government servants, does not provide for the revival of leave encashment benefits after re-employment.

The Court emphasized that allowing re-employed government servants to claim leave encashment multiple times for the same leave could lead to unjust enrichment, which would be detrimental to the public interest.

Balancing Employee Welfare and Public Interest

While the Court acknowledged that leave encashment is an entitlement that supports employee welfare, it also highlighted the need to balance this with the financial stability of the government. The public exchequer cannot bear the burden of excessive leave encashments, especially when they have already been paid during the initial retirement.

The Court also rejected the respondent’s argument that the cancellation of the leave encashment violated the principles of natural justice. It stated that no prejudice was caused as the respondent had already been given a reasonable opportunity to present his case.

Conclusion

In its final judgment, the Supreme Court upheld the government’s position, ruling that a government servant who has already availed of the maximum 300 days of leave encashment at retirement cannot claim additional leave encashment upon re-employment. The Court made it clear that the leave encashment provisions are meant for employees who retire under the rules and should not be exploited for those re-employed after retirement.

• Download Court Order