Karnataka High Court: Leave Encashment Is a Constitutionally Protected Property Right

In Writ Petition No. 100339 of 2025, the Karnataka High Court delivered a landmark verdict asserting that leave encashment constitutes a part of the employee’s terminal benefits and is protected under Article 300A of the Constitution of India, which guarantees the right to property.

The case involved a dismissed employee who was denied leave encashment on the ground of alleged misconduct. The Court rejected the employer’s justification, stating that unless explicitly permitted by statute, no part of terminal benefits can be forfeited. The Court thus held that leave encashment is not only a statutory entitlement but also a constitutional right and ordered its payment.

Terminal benefits such as leave encashment are enforceable constitutional entitlements. Any attempt to deny them must be sanctioned by statute.