Can Employers Deny Leave During Notice Period or Extend It? What's the Norm?

If any employee during the notice period prior to resignation prefers to take Earned/Privilege leave (assuming the employee has leave credit), can the employer refuse the same or extend the notice period on a pro-rata basis? Is there any case law in this regard? Also, what is the prevailing industry practice during such circumstances?

Thank you.

I believe the employer can refuse the same. Recently, we had a similar case in our organization. As per the terms of the employment letter, the employee has to give 3 months' notice. The employee who had submitted the resignation was having 45 days to his credit. He had worked for 2 months and then he said he proposed to avail 30 days leave and will report to the office after 30 days. However, the company has refused, and he was relieved on completion of 2 months. The 30 days' notice period was adjusted in his available leave.

Usually an employee is entitled to take only sick-leave during the notice-period (because diseases and sickness is not aware if you are on notice period of not hahahaha). Earned leave, if any in your account at the time of resignation get enchased and get paid along with the full and final. Some companies do have the policies where they prefer not to encash the “balance earned leaves”, in that case the employee has the right to avail all his leave during the notice period and no management can stop him. I hope this information will be of some help to you. Thanks and Regards Sanjeev

Thank you for your response.

In the instant case, the sanctioning authority does not have any reservation to sanction; however, he is requesting a clarification regarding admissibility vis-a-vis policy issue. Unfortunately, the service condition remains uncovered.

My immediate reaction was if the employee is otherwise eligible (suppose if he had not submitted the resignation), it is better to allow leave. Also, in the present situation, in case of resignation, only 50% of EL in credit is allowed for encashment. So, ethically, it is inappropriate to disallow. I am also averse to extending the notice period as one employee has enjoyed/approached for leave for part of the notice period.

However, one Senior Executive is of the opinion that leave is not allowed during the notice period and there are case laws in this respect. However, I put forth a few situations defending my point:

1) The employee may ask EL/PL on medical grounds in the absence of sick leave. One can argue by introducing medical check-ups, etc.
2) The employee may ask EL/PL for a dependent's treatment - the employer cannot force a medical check-up in this case.
3) The outgoing employee may ask for EL/PL for personal reasons or most generously ask for preparatory leave prior to joining a new end - if the situations (1) and (2) are agreed upon, then why refuse in (3) case? After all, why should I put my head on such trivial matters?

Definitely, one needs to keep parity before deciding.

Also, the refusal of post-sanction may open a new dimension regarding the service continuity of the relevant period and may create a problem for post-separation terminal settlement.

Summing up, I mean if enjoying such leave is not an act of indiscipline or against the interest of the organization, it is better to grant it. Just because somebody tendered resignation does not entail the management to refuse the leave - that is what I believe.

I approached because I simply wanted to know the existence of any such case law to check the veracity of my interpretation.

Thanks again to you all.

Dear Sir/Madam,

An employee in the notice period can take leave if he has the same in his credit. Moreover, his physical presence is not required if he has given notice, and after the notice period is over, he will be relieved as in the case of any other resignations. No one can force him to be physically present during the notice period. However, in case he is not present at the office during the notice period, he will be on a loss of pay. This is one of the judgments passed in the Supreme Court a few months back.

Thank you.
Sanjeev

Hi Indranil,

This is a very common scenario in organizations today as attrition has hit nearly every industry, so there should be some flexibility in the policies. The exit experience for the employee should also be a very pleasant experience because in this way, the organization contributes to branding.

If the policy is clear to your employees, they will not be confused, and neither will you. You should do what is justified and not what is practiced in other organizations. Create a win-win situation so that the employee is satisfied, and maybe they may come back in the future to your organization. It is for you to think and not what is there in the policy.

Wait for your reply.

Thanks and Regards,
Kumar Manoj :-P

Hi Sanjeev,

I disagree with your inputs. In the case of an employee's resignation, we need to identify an alternative, either internal or external. The new incumbent should receive training and become accustomed to the current job/role. During this transition period, the workflow should not be hampered, which is typically specified in most organizations' appointment letters. It is made clear that leave approval is at the discretion of the management, except for sick leave, as resigned employees are usually not allowed to take leaves.

You mentioned a Supreme Court judgment on this matter. Could you please share the details with me via email at kraos_1954@yahoo.co.in?

Thanks and regards,
Kameswarao

Dear Kumar,

I agree with the branding issue. However, the justification issue is very much person-dependent. It depends on how one interprets, especially when there is a lack of specific rules. In fact, industry best practices lie there, extending some legitimacy.

Regards,

According to the terms of service employment:

1. Employee and employer are bound to have a stipulated notice period of either 3 months or one month, whatever may be.
2. Employee or employer may put an exclusive clause in the employment contract or service contract, whatever it may be called, for the purpose stating "Notice period or salary in lieu of notice from either side."
3. Leave is part of the employee's earnings and is largely being practiced as adjustable against the notice period in case of termination.
4. It is at the employer's discretion to relieve the employee depending on the exigencies of work, and the replacement of the incumbent is a matter of mutual understanding.
5. It is wise for both parties not to dispute, and the employee should have the option of an honorable exit rather than engaging in a blame game. This is in order to exercise good HR practice, as bad practices do not align with HR professionalism. Especially family-owned businesses tend to have such tendencies to harm employees by challenging the notice of termination or raising disputes in labor court just to harass the employee leaving the organization. This issue is more about ego than labor laws. No law can force an employee to work forcibly or require an undue period to continue with an employer if the employee has lost confidence in the employer merely for the sake of a written employment contract or service contract, which is not valid.
6. In my 17 years of experience with many industrial disputes, I have never come across a situation where an employee wants to leave the organization, and the employer is not relieving them. If an employer is adamant about not relieving an employee, the employee sacrificing all their dues is a practical solution.

Regards,
Sawant

We need a professional opinion on Professional Tax.

We have a situation. Our payroll cycle runs from the 21st of the month to the 20th of the next month. Employees who join after the 20th get their pay in the next month's process. So we pay the Professional Tax for the next month (assuming that the previous employer has paid the last month's Professional Tax).

The query raised is – Are we supposed to pay the Professional Tax arrears of 10 days for last month?

The example:

An employee (X) joins on the 24th of April 08. He gets his salary in the month of June with the arrears of 7 days of April. As per his slab, his Professional Tax is deducted (Salary - 4500, Professional Tax deducted is Rs 120). So, do we have to pay for the 7 days which he had served in April 08, i.e., last month's?

So, which of the three conditions do we adhere to:

1. We do not pay for April - Rs 0
2. We pay for the days served - 120/30 = Rs 4 per day, so 4 * 7 days = Rs 32
3. Or we pay the whole amount - 120 for April

In today's scenario if you are serving the complete notice period organisation normally are flexible incase employee is taking one or two leaves in the middle but it should not be a long gap and then you resume the office in the end…no organisation would prefer that……Normally your CL are forfeited if you resign ….you can only avail EL and SL for two three days not much…..but exceptions are there to this clause……

An employee can avail earned leave (EL) during the notice period. Many companies do not allow casual leaves during the notice period. EL can also be encashed at the time of full and final settlement. However, EL does not get adjusted with the notice period as there are different calculation methods for EL encashment and notice period deduction in some organizations. Regards

Dear team,

As per legislation, every 21 days, an employee is eligible to earn 1 leave. The availability of such leaves depends on the standing order and appointment. For example, to avail of Paid Leave (PL), we have specific policies in place as per legislation.

During the notice period, if an employee wishes to take leave and follows the rules and regulations outlined in the standing order or appointment letter, they are legally eligible to do so. However, since leave approval is necessary, the approving authority has the discretion to decide on the leave request as they see fit.

Regards,
Virendra

Hi,

It has been noticed that the leave can be adjusted during the notice period as per mutual agreement. When an employer asks the employee to leave while the employee is ready to serve the notice period, in such cases, during leave encashment, the employee or self-agent gets 50% of the amount. If he had adjusted it against absenteeism or notice, then he will receive one day's full wages. We have to consider all angles, as the employee has earned this leave during their service and has not availed much, remaining present on duty, which we all have to remember.

In some cases, the employer does not allow taking leave during working days, so why not adjust it during the notice period. It should be a handshake from both sides, not just from the employee or employer side only.

Hi all,

As Mr. Kameswara Rao rightly said, it depends on the position. We cannot easily recruit candidates for some critical positions. So, we may have to inform that candidate that he will be relieved only upon completion of the notice period. Otherwise, they will not receive their final settlements, and disciplinary action will be initiated against them.

In our company, the notice period is three months. For some positions, we relieve them before the completion of the notice period after adjusting the leave at their credit.

For critical positions, we clearly communicate that they must complete the notice period and will not be granted any leave (except SL). If they leave the company before completing the notice period, we will not settle their accounts. We have encountered such cases in our company and have not settled their accounts to date.

Since most companies are willing to compensate notice pay or adjust leave salary against the notice period, candidates are leaving organizations without any moral responsibility.

Hence, HR should make a firm decision on this.

Regards,
A B Srinivasan

Hi Indranil,

First of all, I believe that you have been badly hurt by your HR. I always have an opinion for HR, that in any such case, one should always remain calm and try to understand the employee's point and make them understand the actual policy/reason.

In your case, Indranil, during the notice period, no leaves are acceptable. However, if you have to attend to any urgent work, you could be permitted to do so, but then your notice period will be extended. To justify my statement:

1. The notice period is actually a handover period. It is not only a question of handover but also about finishing your present work within a limited period of time and training the new person. It may not be feasible to take leaves and still complete the work as defined above.

2. Rules are made for all, not for one person. If you have 20 pending leaves, you can avail of them if permitted and finish off your notice period. However, completing the work as stated in point no.1 may become challenging in this case.

3. While you may argue that during the employment period, you were allowed to take leave, the situation during the notice period is different due to the limited time available. The company needs assurance that you will complete your work even after the notice period.

4. As a good HR practice and company policy, a company may permit urgent work during the notice period but would need to extend the notice period to ensure the completion of work as stated in point no.1.

I believe you may have understood the points and found answers to your questions.

Regards,
Meghal

Thanks for your response. Actually, in this case, the sanctioning authority does not have any reservation to sanction leave. However, there is a request for clarification regarding admissibility vis-a-vis policy issues, which unfortunately remains uncovered by the service conditions.

My immediate reaction was that if the employee is otherwise eligible (suppose if he had not submitted the resignation), it would be better to allow leave. Also, in the present situation, in case of resignation, only 50% of EL in credit is allowed for encashment. Therefore, ethically, it is inappropriate to disallow. I am also averse to extending the notice period, as one employee has already taken/asked for leave during part of the notice period.

However, a senior executive holds the opinion that leave is not allowed during the notice period, citing case law. I presented a few situations defending my point:

1) The employee may request EL/PL for medical reasons in the absence of sick leave - one can argue by introducing medical check-ups, etc.

2) The employee may request EL/PL for a dependent's treatment - the employer cannot force a medical check-up in this case.

3) The outgoing employee may request EL/PL for personal reasons or, more generously, ask for preparatory leave before joining a new endeavor - if situations (1) and (2) are allowed, why refuse in case (3)? After all, why should such trivial matters be a point of contention?

Certainly, parity needs to be maintained before deciding. Additionally, a refusal of post-sanction may raise concerns regarding service continuity for the relevant period and could create problems for post-separation terminal settlement.

In summary, if the enjoyment of such leave is not an act of indiscipline or against the interests of the organization, it would be better to grant it. Just because somebody has tendered their resignation does not mandate the management to refuse leave - that's my belief.

I reached out because I wanted to know if there is any relevant case law to verify the accuracy of my interpretation.

Thanks again to you all.

I would also like to receive a copy of the judgment that is being mentioned by Sanjeev here in his post.

The only thing I want to comment on this post is the decision of granting a leave or not will vary on a case-to-case basis. It will depend on the work profile of the resignee. If the work being handled by him is so critical and there are no replacements available during the notice period, then the company may or may not grant/approve the leave provided the remuneration terms are cleared with the employee.

Thanks & regards,
Anal Shah
shahanal12@yahoo.com

Hi Indranil,

According to me, I usually calculate the recovery for the notice period not served. Then, I only adjust some of the days of recovery by ELs in his leave account. The rest of the recovery he has to deposit in the accounts department.

Regards,
Anju

Dear Indranil,

It all depends upon the discretion of the leave approving and sanctioning authority. As the employee is on notice period and will not be allowed to perform all of the important tasks while in the notice period, therefore the employee can be allowed to take leaves amounting to 7-10 days depending upon the workload of the department.

But the departing employee needs to be present on the last working day of his notice period.

Thanks,
Amit Gera

Availing of leave during the notice period is basically an administrative issue rather than a legal issue. It has to be handled very carefully because the employee who is leaving after so many years of service should not be given such treatment. Any amount of legal citations is not going to help us much.

Hi,

As per legal norms, you cannot provide CL, EL, or PL to employees but can provide SL because you are not able to control the situation of illness. At the time of submitting Sick Leave, a Medical Certificate is needed for availing leave of 3 days or more.

Amit Chandak

The procedure of allowing leave to employees during their notice period will vary from company to company. In some companies, the relieving date will be extended to the extent of leave availed by the employee who has resigned. In my opinion, if the resigned employee has handed over all documents and completed the existing formalities, he/she can be relieved at the quickest possible time, as the employee who has resigned will not contribute 100% to the company, and there is no point in keeping such an employee until the completion of their notice period.

With regards, L. Kumar

In the South African Government, we are allowed to give 30 days' notice for resignation for employees with more than one year of service. For less than 1 year in service, 1 week's notice is required. Although if a person leaves you with no choice but to resign tomorrow and he comes in today to give notice - there are no consequences other than missing out on a month's salary. No work, no pay. Leave is not allowed to be taken in the notice period because of final processing.

It depends actually on the circumstances. We generally give leaves. If the leaves are not granted in any case, the company is going to encash the same at the time of full and final settlement. If you think from another point of view, i.e. when an employee needs to serve 30 days' notice and he simply serves 15 days' notice, then in that case we deduct his 15 days' salary (depending upon the terms and conditions of the appointment letter), but at the same time, we give him encashment at his full and final settlement. Thus, whichever way we go, the employee gets the benefit. Giving leave is not a problem, which actually depends upon the circumstances. Sometimes the environment created by the concerned employee is not conducive for the organization, and sometimes the organization does not like the employee, meaning the organization wants to terminate him. At the same time, the employee submits the resignation along with his leave requirements, and the management sanctions it. Thus, I personally feel it depends upon the circumstances. If I am wrong, please correct me...

Hi, can you suggest if an employee has recently joined and has taken two days' leave, are they entitled to CL/SL? What is the legal provision for the grant of CL/SL for new joinings?

Thanks,
Ashish Narwal

For a new employee, we have a stipulated one day for every 17 days taken vacation and one day sick per month if needed. This is during the probation period; therefore, the probation period is extended.

Dear Indranil,

I find your query a bit confusing. Please note that there cannot be any notice period prior to resignation. The notice period will start only after one has tendered his resignation.

Now, as to the admissibility of leave during the notice period, please note that there is no bar on taking earned leave to one's credit during the notice period. You may refer to Ghanshyam vs. Delhi Metro Rail Corp., 2007, LLR, 490, Delhi High Court for the legal position on this subject.

Regards,
Mohan

Hi Folks,

I am suggesting a comprehensive solution to the problem faced by most of us after going through all the responses. Firstly, I do not feel there will be any legal provision or case law on this issue, and this issue needs to be governed by a proper policy framed by the employer.

The purpose of the notice period is to facilitate time for i) finding a replacement, ii) completing the work and assignments in hand before exiting, and iii) properly handing over the work, records, documents, etc., to the successor. If any of the above purposes are being defeated by allowing leave, then leave during the notice period can either be refused, or the notice period may be extended by an equivalent number of leave days.

It's better to have a proper policy framed to deal with such cases, with discretion given to HR and the immediate supervisor to allow or disallow leaves during the notice period. Generally, most companies pay Leave Encashment against unavailed Leave Balances. In such cases, employees leaving the company are discouraged from using the leave before being relieved. Leaves during the notice period for genuine reasons should not be refused.

If a company is in a position to give leave for a longer duration (say, 10 days or more) during the notice period without substantial reason, then I feel there is no need for the entire notice period to be served. In such cases, it is better to relieve such employees early rather than forcing them to serve the notice period.

I have come across some very funny practices where some companies allow leaves during the notice period. An employee who is actually on leave joins the new employer and only turns up on the last day of the notice period to collect relieving and F & F. Such practices make a mockery of the HR profession.

Some companies have long notice periods, up to three months. Many times such a long notice period is not necessary. After an employee decides to leave, they are neither interested in work nor in the company, and they simply kill time in the office and become a nuisance. It is better to complete the relieving formalities of such employees and relieve them as soon as possible.

Many times the concerned employee is in a great hurry to join the new employer. Hence, either they request early relieving by waiving the notice period or request leave to take up a new job.

One also needs to consider the 'Loyalty' factor from both the employer's and employee's sides while framing the policy. An employee is not expected to throw loyalty to the wind by asking for early relieving or leaves to get a few more rupees from the new employer. They need to be responsible and patient while changing jobs.

I hope whatever I have written makes sense.

Vijay

Finally, I am relieved with the case law. It supports the decision I took. Actually, my immediate senior was having a different interpretation altogether. Notice period prior to resignation, here the term resignation means the date of the effect of the cessation of employment relation. Now I must be clear to you. Again, thanks a lot for providing the case law information.

Dear Indranil,

The general practice is that resignation and its related notice period are governed by clauses of the appointment letter which exclusively state either to work for a stipulated date or receive pay in lieu of that. Applying for leave is a right for employees, whereas it may be granted with pay, without pay, or can be refused depending on the exigencies of work.

Thirdly, as far as the payment of earned leave (EL) is concerned, it is governed by the Factories Act. So, in my view, leave may or may not be granted depending on the decision of management. It cannot be adjusted, but the accumulated leave will be encashed in full and final payments. Therefore, employees have to work during the notice period, and no leave will be adjusted or granted as normally the appointment letter, HR manual, or Standing Orders of the company are silent on this aspect.

For any further queries, you can email me at ranjan369@hotmail.com.

Regards,
Ratnesh Ranjan

Dear Mohan,

I have tried our resources, unfortunately, yet to trace out the case law of Ghanashyam Vs Delhi Metro. If you have a soft copy, please forward it to me.

Regards.