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Hi, The Company where I'm working introduced a new global shutdown during December last week and it has deducted the earned leaves from every employee for that. Can the company do that in India, can the company simply declare the shutdown and deduct our ELs for their sake? Bcoz as Indian employees we don't want those holidays and my point is when the company itself has declared the shutdown, then what's the meaning of taking our ELs?

Please give inputs on whether it legal is in India according to labour law.


From India, Bengaluru

Hi Lakshmi,

I can provide you with some general information. In India, employment laws are governed by various statutes, and the specifics may vary depending on your employment contract, industry, and other factors.

Typically, companies are required to comply with the terms and conditions mentioned in the employment contracts and relevant labour laws. The legality of deducting earned leaves for a company-declared shutdown may depend on the specific terms outlined in your employment contract and whether it adheres to applicable labor laws.

In India, the Leave Policy is generally governed by the Shops and Establishments Act of the respective state, and sometimes by specific labour laws applicable to your industry. It's advisable to review your employment contract and relevant labour laws to understand the specifics regarding earned leave, company shutdowns, and deductions.

If you have concerns or queries about the deduction of earned leaves during a company-declared shutdown, you may want to consult with your HR department or seek advice from a legal professional who specializes in labour law in India. They can provide guidance based on the specific details of your situation and the applicable legal framework. Keep in mind that labour laws are subject to change, so it's essential to consider the most up-to-date information.


From India, Bangalore

@Lakshmi-k, You have said that "Company where i'm working has introduced a new global shutdown during the december last week and it has deducted the earned leaves from every employee for that". Is it that the company is going to close down its operations and in view of it the company has asked the employees to surrender their leaves?

There are some procedures to be followed for closure of undertaking. Accordingly, it should inform the appropriate authority under the Industrial Disputes Act and the employees of its intension to close down. Every employee should be given one month notice. Since the closure in going to be effective in December last, the notice is required to be now. The settlement should be like compensation to every employee who has worked for 240 days in the preceding 12 months be paid an amount of compensation at the rate of 15 days' salary for each year of service. The settlement should also contain leave surrender upto 24 days' earned leave. Obviously, all employees who have worked for five years should be paid gratuity at the rate of 15 days salary for every completed year of service. This is the least settlement as per law.

From India, Kannur
Hi Madhu,
I'm mentioning about the annual shutdown from dec 22nd to jan 2nd, where company has declared it as shutdown of all branch during that period but have forcefully deducted our EL's (mentioning it has a new policy). My question is can i question the company about the forceful deduction of my leaves? Does company legally have rights to deduct our EL's. I'm working at US based semiconductor company as a engineer.


From India, Bengaluru

If I am correct, shut down means lay off.
If the unemployment caused by lay off is for short period the unemployment should be treated as compulsory leave either with or without wages .This is as per ID act.
The earn leave is govern by factory act or shop and establishment Act. Your organisation not interested to pay for lay off period directly so it paying you through EL.

Sunil Kumar

From India, New Delhi
Hi Kumar, They have mentioned like, End of year office closure. Regards, Lakshmi
From India, Bengaluru

Hi Lakshmi,

It is a common procedure followed @ IT/ITES sectors.

Normally during every year end there will be some sluggishness in the Project as Clients from US/Europe will be on Holiday due to Christmas / New Year Celebrations. As many of these companies outsource Projects from US/UK Clients, there will not be much work load for employees. Hence many Companies declare common holiday during years ends and in order the reduce the accumulated EL or PL balance those holidays will be adjusted against accumulated leave. IT employees who work under stress for the whole year will take this a weeks break happily.

It is true that it should not be a compulsory measure but @ IT Companies most of the employees perceive this break as good break and they don't mind their leaves getting adjusted. This has nothing to do with lay off.

From India, Madras

Yes, it should be considered as lay off and lay off should also be declared for reasons laid down in the ID Act and after intimating the officer concerned of the labour department. No way the earned leave can be surrendered. But when the system is like this which calls for such annual shut down for any reason, there could be a preplanned arrangement whereby the employees affected is given a compensation.
From India, Kannur

This is common practice for many organizations. In 3 MNCs where I have worked during my career- Guest Keen Williams, Philips India and Vesuvius India Ltd, I have noticed that specially during Durga Puja ( famous festival in WB ) there is already 4 / 5 days festival holidays and along with it another 4 / 5 days are add back to get at about 10 days shut down. Last 4/5 days are considered as special leave or 50:50 adjustment by both employer and employee etc. There is no Lay off or Closure rule applicable for the period.

This is amicable settlement / understanding as shut down is also part of the process for smoothly running of the organization throughout the year.

S K Bandyopadhyay ( WB, Howrah )
CEO-USD HR Solutions
+91 98310 81531

From India, New Delhi

Employees get EL as per their attendance in a calendar year and at the end of calendar year all leaves earned as per the Co policy remained in employees' account.
The leaves credited to employee's account can't be altered or changed, unless the employee used remained intact to maximum accumulation number.
There is nothing called global shutdown in labour laws unless until appropriate government declared such disasters. The employees affected by such changes bring it to knowledge of appropriate govt authority. This is nothing but unfair labour practice.

From India, Mumbai
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