Can We Legally Change Our Leave Policy to a Single Paid Leave System? Seeking Advice

Dear All,

I am working for a BPO company, and our management would like to revise the leave policy. As of today, we have CL of 12 and EL of 18, but they would like to consolidate all leaves into a single basket as PAID LEAVE of 13 per year (as per every 20 days of attendance). They would also like to restrict carry forward or any encashment.

Please let me know if we can introduce this as per labor law.

Awaiting an early reply.

Thanks & Regards,
Abhiman

As far as I know, BPO companies are not governed by the leave rules under labor laws, since IT/ITES companies enjoy several exemptions under the concerned state's IT/ITES Policy. However, as a matter of prudence, I would recommend that you also keep the three national holidays (Jan 26, Aug 15, and Oct 2) official. If you cannot give employees off on these dates, include the quantum of compensatory off/special pay for working on these days in your leave policy itself.

Would request seniors from this industry also to comment on this.

Regards, Raj

Dear Mr. Abhiman,

It is wrong to say that BPOs are not governed by labor laws. All BPOs need to be registered under the Shops and Establishments Act of the particular state. In your case, you have to follow the Mysore Shops and Establishments Act of 1971. According to the above-mentioned act, you are required to provide one day of leave for every 20 days worked as Privilege Leave (PL) and 12 sick leaves in a year. PL can be accumulated up to 30 days, and you must provide encashment when someone leaves the organization.

Basically, Abhiman, all labor laws are applicable to BPOs, but they often do not comply with the laws, and most employees do not raise complaints to labor authorities as they are educated and prefer to avoid litigation.

Thank you.

J S Malik

Abhiman,

I fully endorse the view of Malikjs. BPO is an establishment under the definition of the 'Shop & establishment Act' of the respective State, and the regulations have to be followed. Being an HR official, it is better to convince your employer of this and inform them of the consequences of violating such labor laws. It is better to be ethical in business and be people-task oriented rather than task-people oriented.

Good luck,
Gopan

Generally, we provide 12 CL, 12 SL (for non-ESIC employees), and 15 EL/PL. These EL/PL are calculated as 1.25 days per month in shops and establishments. Under the Factories Act, it is 1 EL/PL per 20 days, resulting in 18 EL/PL. These PL/EL can be encashed and carried forward to the preceding year. If an employee leaves the organization, we calculate 1.25 days per month, and that amount will be paid in full and final settlement. The maximum encashable EL/PL depends on the company policy; some companies pay 40 or 60, which is based on management decisions.