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LPR is Leave Preparatory to Retirement, the last year of leave before a government servant retires. Leave encashment is cash in lieu of that leave, paid instead of taking it.
A retiring employee either takes the leave or takes the money. The choice is made before retirement, and the rules are different for federal, Punjab and KP employees.
What is LPR in Pakistan?#
LPR is leave preparatory to retirement, the leave a government servant takes in the last year before retirement. In Urdu: ریٹائرمنٹ سے پہلے کی چھٹی.
The maximum LPR is 365 days, subject to the leave standing at your credit. You earn leave on full pay at the rate of four days for every calendar month of duty, and there is no maximum limit on how much leave you can accumulate.
LPR may be taken partly on full pay or partly on half pay, at your choice.
Officers of BPS-21 and BPS-22 who opt to retire voluntarily after completing 25 years of service may be granted their entire leave at credit on full pay until the date they complete 60 years of age.
LPR cannot be combined with any other kind of leave. If you are employed during LPR, your leave salary is restricted to the amount of pension you are entitled to on retirement.
What is Leave Encashment in Pakistan?#
Leave encashment is cash paid in place of leave preparatory to retirement. In Urdu: چھٹی کے بدلے نقد رقم.
There are two routes to it.
Under Rule 18-A of the Revised Leave Rules 1980, a federal civil servant may, 15 months before superannuation or 30 years qualifying service, opt in writing to encash his LPR.
He must undertake to perform duty in lieu of the whole period of 365 days or the lesser period due and admissible.
The second route is refused LPR under Rule 17. If you apply for LPR in sufficient time and the authority refuses it for reasons of public service, you are granted leave pay for the leave refused, up to a maximum of 365 days.
The leave can be refused partly and sanctioned partly, and the cash is paid only for the part refused.
If you do not exercise the option within the specified period, you are deemed to have opted for encashment of LPR.
After exercising the option, you must perform duty during the entire period up to retirement, and you cannot take any kind of leave during the last 15 months, except leave on medical grounds or for Haj.
Leave Encashment Rules in Pakistan#
The federal, Punjab and KP rules agree on the 365-day LPR limit, but differ on how much can be encashed and on which pay is used.
| Rule | Federal | Punjab | KP |
| Maximum LPR | 365 days | 365 days | 365 days |
| Maximum encashment | 180 days under Rule 18-A; 365 days if LPR is refused | 365 days of refused LPR | 365 days |
| Pay used for encashment | Rate at the time the leave pay is drawn | Initial pay of the pay scale | Pay and allowances reckonable towards pension, as shown in the last pay certificate |
| How the money is paid | Lump sum or month-wise | Monthly, in addition to monthly pay | Leave salary for the period |
Punjab changed its rule on 1 June 2023, by Finance Department Notification No. FD.SR.II/2-97/2019. Encashment is now only for refused LPR, and it is paid on the initial pay of the pay scale, not on the last pay drawn.
The change applies to servants retiring on 1 June 2023 or after.
Under the amended Punjab Rule 17(7), a civil servant who wants encashment of LPR for up to 365 days must submit a written application to the appointing authority for grant of LPR at least three months before his LPR starts.
If the authority refuses, he is entitled to encashment of refused LPR for 365 days equal to the initial pay of the basic pay scale.
A civil servant who is compulsorily retired is not entitled to encashment of LPR.
A Punjab clarification of 9 September 2024 (U.O. No. F.D(SR-II)2-36/2024) settled how the money is paid.
Leave encashment in lieu of refused LPR must be paid monthly, at the initial pay of the pay scale, in addition to the employee’s monthly pay, not as a single lump sum.
In Punjab, only the Senior Post Allowance is included in leave pay for encashment. No other allowance forms part of the pay for this purpose.
If leave is granted on account of ill health, supported by a medical certificate, or for performance of Haj during the encashment period, the cash compensation is reduced.
Under the federal rule, it is reduced by half the leave pay for the period of leave taken: if you take 60 days of leave, 30 days of cash compensation is forfeited.
How to Calculate Leave Encashment in Pakistan#
Leave encashment is calculated on basic pay, not on gross pay. The formula is:
Leave pay = Basic Pay x 12 x Eligible Days / 365
Worked example, federal: a BPS-14 employee retires with a basic pay of Rs 27,060, the minimum of the BPS-2026 scale, and encashes 180 days under Rule 18-A. Rs 27,060 x 12 x 180 / 365 = Rs 160,136.
Worked example, Punjab: a BPS-14 employee retires with an initial pay of Rs 27,060 and his LPR of 365 days is refused. Rs 27,060 x 12 x 365 / 365 = Rs 324,720, paid monthly at the initial pay of the scale.
The pay scale chart 2026 lists the minimum basic pay of every BPS, which is the figure Punjab uses for encashment. The earned leave rules guide explains how the leave at your credit is earned and counted.
LPR vs Encashment in Pakistan#
LPR and encashment are the two ways of using the same leave. LPR gives you a year off before retirement, with leave pay. Encashment gives you cash, and you keep working until your retirement date.
Choose LPR if you want time off before retirement. Choose encashment if you want to keep working and take the money instead. You cannot take both for the same period: an employee who opts for encashment cannot avail any portion of the LPR.
If you die during LPR before completing 180 days of it, your family is entitled to a lump-sum payment equal to the period falling short of 180 days.
On death or permanent disability, a lump-sum payment equal to leave pay up to 365 days out of the leave at your credit is made to your family.
On premature retirement after 31 years of qualifying service, with three months notice, encashment of LPR up to 180 days is also admissible under Finance Division O.M. No. 591-R.4/83 of 4 September 1983.
LPR Application in Pakistan#
Apply in writing to the appointing authority. In Punjab, the application must reach the authority at least three months before your LPR starts.
To The [Appointing Authority], [Department] Subject: Grant of Leave Preparatory to Retirement Respected Sir/Madam, I request grant of leave preparatory to retirement for 365 days with effect from [date], as I am due to retire on [date]. My leave account shows [number] days at my credit. Yours faithfully, [Name, Designation, BPS]
Keep a copy of the application and the refusal, if any, because the refusal is the basis for encashment of refused LPR.
The government pension guide covers what happens after retirement, and the retirement age guide lists the retirement ages by service.
Frequently Asked Questions#
What does LPR stand for? LPR stands for Leave Preparatory to Retirement. It is the leave a government servant takes in the last year before retirement, up to a maximum of 365 days, subject to the leave standing at his credit.
How is leave encashment calculated? Leave pay = Basic Pay x 12 x Eligible Days / 365. For example, a BPS-14 employee with a basic pay of Rs 27,060 who encashes 180 days gets Rs 160,136.
Only basic pay counts, except the Senior Post Allowance in Punjab.
Can I take LPR and encashment together? No. You either take the LPR or encash it, for the same period. An employee who opts for encashment cannot avail any portion of the LPR, and must perform duty until the retirement date.
Is leave encashment taxable? Leave encashment is paid as leave pay. The exact tax treatment depends on the current tax rules, so confirm it with your accounts office before retirement.
How many days can be encashed? Under the federal option, up to 180 days. If your LPR is refused, up to 365 days.
In Punjab, up to 365 days of refused LPR, paid monthly at the initial pay of the scale. In KP, up to 365 days.
