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Hi: My IT company would like to implement the concept of "unlimited PTO/ leaves" for the Kolkata office. They have implemented the same benefit for the US corporate office. Employee do not accrue any leaves but can avail these leaves if their Manager approves them. The employees are not paid for any leave balance when they leave the company.

Does this concept infringe any state or central laws? Please help.

Dinesh Divekar
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Being an IT set up, you are governed by the Shop & Establishment Act of the state to which you belong. The provision regarding leave is there in the Act and you are bound to follow it.
Your leave policy of the principal in US sounds very interesting but then it is all in the hands of the Manager and the employee is at his mercy.

From India, Mumbai
Dinesh Divekar

Dear friend,

The employee becomes eligible to get a certain amount of leave under the provisions of either shops and establishment act or the factories act of the respective state. In your case, it should be the West Bengal Shops and Establishment Act.

While there are a few differences in the acts enacted by the various state governments, an employee is eligible to get 15 days of earned leave per year. A particular company may choose to give a little more leave than prescribed by the act, but not less.

In your case, your company chooses to provide unlimited days of leave. However, what if an employee avails of the leave even below the required level of 15 days? Should he be forced to forego the unavailed portion of the leave? No, this is not possible.

There cannot be a tradeoff between the provisions of the company on their own and statutory provisions. Therefore, whether your company provides an unlimited number of days of leave or not, the unavailed portion must be carried forward, and if the employee does not exhaust that leave, then he/she should be paid salary for that period.

A senior member has given a reply. However, other senior members are expected to give a reply to validate what I have said above.


Dinesh Divekar

From India, Bangalore

Any MNC having its operations in a host country is bound by the law of the land; particularly if its branch in the host country employs native citizens, it should comply with the provisions of all the labor laws applicable without any deviation to their disadvantage.

If a meticulous attention is focused on leave provisions of any labor law, it would be discernible that provisions relating to leave and holidays of employees as well as the establishment emanate from the socio-cultural aspects of the region only. Therefore, it would not be pertinent to apply the leave provisions of the labor law of the home country of the MNC for the sake of uniformity of application across the world wherever it has its operations.

All the establishment-specific labor laws in India do not have similarity in leave provisions because of the differences in their operations and the nature of the works performed by the employees. Only exception to this generality is the earned leave to employees. Its speciality lies in its carry-forward feature to the succeeding years, if unavailed, accumulative benefit to a certain statutory limit and encashment right on the termination of employment of the employee for whatever reason. But the U.S provisions cited in the post run exactly counter to the above statutory provisions obtaining as of now in all the Indian labor laws.

It is exactly the gist of the views expressed by the above learned members which every one has to subscribe to only.

From India, Salem

Yes, this can make the organization in trouble if there are no proper policies are in place.
Unlimited Leave is quite impractical as no employee can go on leave, for indefinite period (without pay also).

1. As per Shops Act, the organization has to maintain a few registers for leave and attendance as well
2. There are specific rulings for leave
3. Leave availing can not be at the mercy of approver
4. Leave encashment, lapse, carry forward kind of aspects also shall be considered in long term

If the idea is to have flexible policies, reduce checks and balances but it is not recommended to ignore the labour legislations.

From India, Bangalore

I agree with the replies given above.
If you still want to have the policy in place, you need to have certain amendments to it for your Indian operations :

1. Minimum Leave of 21 days (I think that is what West Bengal Shop & Establishment Act requires). Meaning manager can not disapprove of leave when the employee asks if it is less than 21 days in that year.

2. if he does disapprove, the carry forward and encashment should apply

3. You will still need to keep leave registers and records, because without that you will never know whether the min day is over or not

Leave is always subject to approval of Managers, even in our laws. But you need to ensure that option is not used to deprive the employee of his basic rights, which in your case is the 21 days of paid leave in a year.

From India, Mumbai

Dear All,

I had experiment and practiced unlimited CL & SL in a MNC manufacturing Plant at Kolkata, WB for workmen and management staff. Workmen had also Annual leave as per Factories Act and Management staff had 30 days Privilege leave. It is Refractory manufacturing organization. In 1994 when I joined in green field project , my MD who was highly innovative and people oriented person advised me to frame certain rules and regulations including leave rule which would make employees more motivated but there must be some control.

The result was till 2018 the organization had no union. Average CL and SL taken by the workmen in a year were maximum 8 days and annual leave taken another 7/8 days every year. The management staff used to enjoy average 20 leaves per year including CL, SL & PL. The definition of CL was - to be taken in case of genuine extreme emergency and SL to be taken in case of genuine sickness. There were cases when 20/22 days CL sanctioned to one workman when his elder sister was suffering with Cancer and 2.5 months SL for broken legs to some other workman.

In 2018 after formation of Union and change of management , the new management tried to change the leave rule with limitation but failed. Till date there is no major misuse of leave system. Surprisingly, if any one has tendency to misuse the leave rule, it is always taken care by fellow workman/union before management initiate any action.

The workmen is designated as "Assistant" - Manufacturing Assistant, Maintenance Assistant, Quality Assistant etc.

To my opinion every thing is possible if there is wish and will with strong leadership and proper relations.

Thanks & Regards,

S K Bandyopadhyay ( WB, Howrah)
CEO-USD HR Solutions
98310 81531

From India, New Delhi
Dear Sir, I thank all the contributors to my question and appreciate your insightful inputs. Regards, AB

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