I managed to fix this after reading forums and talking to Apple support.
First, I think this happens when the Mac goes to sleep during encryption. I enabled vault on my iMac last night which was progressing happily. Left it on hoping it to complete overnight. In the morning it was sleeping and upon waking it up Encryption was paused. Seems like it is happening more often on Mac Books which are usually set to sleep more often.
Tried many things, following is worked (10.11.5 El Capitan if it is relevant)
1. Shutdown, hold Cmd+Opt+R+P upon starting and wait for the second chime. This resets non-volitile memory (nothing to worry about)
2. As soon as you hear the second chime, leave the keys and immediately press CMD+R to go into recovery mode. Leave CMD+R when you see Apple logo and progress bar.
3. In recovery mode select disk util (you may need to select language first).
4. In my case, having a fusion drive I was presented with three drives Fusion Drive on the top, Macintosh HD under it, and BOOTCAMP under Macintosh HD. Amongst these three Macintosh HD comes greyed out. Don't try to First Aid Fusion Drive, it fails. Instead select greyed out Macintosh HD and select Unlock (from the file menu if I am right, right-clicking does not work).
5. Type your password to complete Unlock, you should see now that Macintosh HD is no longer greyed out.
6. Select First Aid and then Run.
7. Upon completion close all windows and select restart.
I tried this process 3 times, it worked on the last attempt and FileVault is now continuing with Encryption happily.
This is what I did specifically different on the 3rd go (cannot guarantee if it was the reason it worked):
1. I pressed CMD+R immediately after second chime of Cmd+Opt+R+P instead of letting it boot and reboot again to go to CMD+R (as suggested by one other forum user)
2. Upon exiting recovery mode after First Aid, I let it wait on the login screen for about 5 minutes (as I was finding login process very sluggish). I let it run whatever it was running before I attempt to login.
Hope this helps
Charlie