Leave Encashment is the amount of money received by an employee in exchange for the leaves not utilized from the paid leaves provided by an organization in a year. As per the labor law, every salaried person receives a particular number of paid leaves from an organization. The quantity of paid leaves is decided by the employer. Many organizations also offer a facility to carry forward the paid leaves in case not utilized in a single year due to which employee has unutilized leave balance in his leave quota at the time of resignation or retirement from the company. The employer has to compensate unutilized paid leave of the employee, this compensation is known as Leave Encashment.