Rule 39 CCS (Leave Rules): Cash Payment in lieu of Leave Beyond Retirement, Resignation or Termination

Introduction

Rule 39 of the Central Civil Services (Leave) Rules, 1972 lays down the provisions for leave encashment when a Government servant retires, resigns, is terminated, or re-employed.
The rule ensures that while no leave can be taken beyond retirement or cessation of service, the cash equivalent of Earned Leave (EL) and Half Pay Leave (HPL) can be granted in specific cases, subject to a maximum of 300 days.

Rule 39(1): No Leave Beyond Retirement or Cessation

A Government servant cannot be granted leave beyond:

1. the date of his retirement,
2. the date of his final cessation of duties,
3. the date on which he retires by giving notice to Government or is retired by Government by giving notice/pay in lieu of notice, as per service conditions,
4. the date of his resignation.

👉 Meaning: After retirement, resignation, or cessation, no leave can be taken. Only cash payment is allowed.

Rule 39(2): Cash Equivalent on Retirement (Superannuation)

(a) Automatic Encashment

When a Government servant retires on attaining normal retirement age:

• Competent authority shall suo motu (on its own) sanction cash equivalent of leave salary for:
  • Earned Leave (EL)
  • Half Pay Leave (HPL), if available
• Maximum limit: 300 days.

(b) Formulas of Calculation

Illustration 1: Superannuation Case

• Pay = ₹60,000; DA = ₹12,000
• EL balance = 200 days
• HPL balance = 150 days
• Limit = 300 days

1. EL component = (72,000 ÷ 30) × 200 = ₹4,80,000
2. HPL allowed = 100 days (since 200 + 100 = 300)
   • HPL salary = (30,000 + 6,000) = ₹36,000
   • Encashment = (36,000 ÷ 30) × 100 = ₹1,20,000

✅ Total = ₹6,00,000

Rule 39(3): Withholding of Leave Encashment

• If a Government servant retires while under suspension or with disciplinary/criminal proceedings pending,
• Competent authority may withhold whole/part of cash equivalent.
• Release happens after proceedings conclude, and after adjusting Government dues, if any.

Rule 39(4): Encashment in Case of Extension of Service

When service is extended beyond retirement:

(a)(i) During extension

• Government servant may avail Earned Leave:
  • Leave earned during extension + EL already at credit,
  • Subject to 180/300 days (as per Rule 26).

(a)(ii) After extension ends

• Government servant gets cash equivalent of:
  • EL + HPL at credit on original retirement date,
  • Plus EL + HPL earned during extension,
  • Minus EL + HPL availed during extension,
  • Subject to 300 days.

(b) Calculation

• Same method as Rule 39(2).

Illustration 2: Extension Case

• Retirement date: 30.06.2025
• Extension: 1 year
• Balance at 2025: EL 120, HPL 100
• Leave earned in extension: EL 30, HPL 20
• Leave availed during extension: EL 20

Final credit = (120 + 100 + 30 + 20) – 20 = 250 days
Encashment = for 250 days, as per formulas.

Rule 39(5): Compulsory Retirement by Notice

• If Government retires an employee under service conditions (e.g., in public interest),
• Encashment of EL + HPL allowed,
• Ceiling = 300 days,
• Formula = Rule 39(2).

Rule 39(6): Termination, Resignation, Re-employment

(a)(i) Termination by notice / pay in lieu

• EL + HPL encashment allowed,
• Ceiling = 300 days,
• Formula = Rule 39(2).

(a)(ii) Resignation / Quitting service

• Only Earned Leave encashment allowed,
• Only ½ of EL balance is encashable,
• Ceiling = 150 days,
• No HPL encashment.

Illustration 3 – Resignation Case

• EL = 200 days, Pay + DA = ₹80,000
• Eligible days = 200 ÷ 2 = 100 days
• Encashment = (80,000 ÷ 30) × 100 = ₹2,66,667

(a)(iii) Re-employment after Retirement

• On termination of re-employment, EL + HPL encashment allowed,
• Ceiling = 300 days (including days already encashed at first retirement),
• Pay = pay fixed on re-employed post (before pension adjustment).

(b) Method of Calculation

• Same as Rule 39(2).
• For re-employment cases, DA = based on re-employed pay.

Master Table: Rule 39 Leave Encashment

Key Takeaways

• Maximum encashment = 300 days (EL + HPL), except resignation (150 days, EL only).
• Automatic sanction (suo motu) by authority; employee need not apply.
• HPL encashment = half pay basis + DA on half pay.
• Suspension/inquiry cases may delay release.