Hi all, We are a start up company and we are in the process of formulating a leave policy.

We are giving CL+ SL = 12 days which cannot be carry forwarded

PL after completing 1 year = 14 (1 day for every 20 working days)

Now the issue is i want to give an option for leave carry forward. So i am putting 30 days can be carry forwarded. Exact doubt is :- if an employee is having 20 days of leave when he enters the next leave calender year he will be credited again 26 days leave then the total leave balance will become 48.

so can i put a formula like from this 48 only 30 will be accounted and rest will be lapsed. So at any point of time the max no. of leaves an employee can accumulate will be 30 days.

Or if i say no leave carry forward is allowed and all leaves have to be completed in the same leave year itself, is there any legal issue ?

Kindly consider this as an emergency query and reply.



From India, Bangalore
Dear Jay,
I would like you to consider this
Say you are allowed to accumulate 30 days leave at the end of the year.
employee may have more leaves during the year but at the end of the year only 30 days can be taken forward.
For example, employee having 20 days in current year may be credited another 20 days in next year but he needs to avail 10 days before end of the year otherwise the same will lapse.
And please allow you employee to carry forward their leave because first it is the right thing to do and second, you will have employees rusing to apply for the leave at the end of the year so that the leave may not lapse and you work may suffer.
Also generally PL PA is 30 and you can have a cap of max 45 days to be carried forward.

From India, Pune
Hi Viraj,
Thanks you very much for the advice...
We are putting the 30 days cap because we need ppl to take min encashment by surrendering leaves.
Requesting one more help. How can i document the calculation as above.
Can i write : Balance EL remaining underutilized as on end of the leave calender can be carry forwarded maximum upto 40 days and rest will be lapsed.
(for more clarity refer below calculation)
Leaves as on 31st Dec = 20
Leaves credit as on 1st Jan = 26 + 14 = 40 ( in this the underutilized leaves carry forwarded from Dec month will be lapsed)
Kindly advice.

From India, Bangalore
In our company, CL cannot be carry forwarded and cannot be encashed.
SL can be accumulated upto 30 days and no encashment if it exceeds.
PL can e accumulated upto 90 days and the excess days will be encashed.

From India, Bangalore
Dear Jay,

First you seperate the leave issues as below:-

Earned Leave / Privileged Leave (EL/PL)- It will be calculated on last year working days and if any employee works completely he will get 15 days ( 301/20) leave. Eeither this can be utilised/carry forward or encashed by the employee.

Casual Leave & Sick Leave is company's decision to extend it to the employee. Factories Act,1948 does not specify to give any CL/SL.

CL/SL will get lapsed at the end of the year (31st Dec) ,if employee does not utilise.

Now you can calculate only the EL/PL balance which should not be accumulated more than 30 days or 45 days what ever it is based on your company's requirement and decision.

Pl note, some company's will allow their employees to accumulate from30 - 150 days. It varies from company to company. Based on your business, manpower strength and employee manual, take a decision to restrict the number of leaves they can accumulate.

I appreciate your concern that company should not bear the burden of encashing the leave when it is more and at the rate of new salalry. Instead you want to encourage employees to get some extra money every year by way of leave encashment which is beneficial to both employee and employer.Eg. employee who is having 30 days of EL in his credit on 31st Dec and getting 15 days of EL on 1st Jan, wherein it becomes 45 days of EL, you can allow him to take 15 days encashment.

Before framing your leave policy / manual please refer the Acts applicable to your state.



From India, Bangalore
before formulating leave policy please go through the Act which is applicable to your company, if its a manaufacturing/production unit then read leave povision under Factories Act & SO Act and if its covered under Shop & Establishment Act then go through that State Shop Act. Otherwise it shall be a non compliance.

dear all
please help srs.
my company is not maintain my leave recourd and pay to me 30 days leave incashment (say leave with wages) yearly for the period april to march.
this is right or wrong?

From India, Bhilwara
Dear Rankam,
Any company shall maintain the leave register, otherwise how can they keep track of how many leaves availed and how many taken. And an employee always has the right to know how many leaves he/she has availed and the balance. Leave Register is must in any company. And ofcourse it depends on the company policies to have leaves on financial year or calander year.

From India, Bangalore
Hi All,
Thanks for the Inputs and views...
I have published the revised new policy based on all your views and checking the legal part too...we got a positive response from all our employees. Once again thanks for taking your valuable time for guiding me.

From India, Bangalore
First of all i want to say that you have some confusion about calculation of leave , you wrote an employee having 20 leave and in the next leave calender year he will be credited 26 and total leave become 48. How is it possible
For your your kind information PL is always be carry forward and it can be maximize up to 30 or 45 or whatever, as per convenience of company. i.e, after the maximum limit rest will be lapsed.
Pawan Agrahari

From India, Delhi

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