How Do Indian Companies Handle Casual and Sick Leave in Absenteeism Calculations?

Hello,

We are a service company with most of our workers covered by the Shops & Establishments Act. The company's certified Standing Orders have provided 6 days of Casual Leave and 6 days of Sick Leave per year. The workers are also covered by ESI and therefore have sick leave paid by ESI, as per ESI rules.

We are calculating the absenteeism percentage (as one of the HR indicators) excluding the Earned Leave, Casual Leave, and Sick Leave (paid by the company) from the absent days.

Being an MNC, our principals abroad accept the exclusion of EL (and other leave such as unpaid long leave authorized by the company and maternity leave not paid by the company, etc.), but do not agree that CL/SL be excluded from absent days. They treat EL as equivalent to the annual leave existing in their country but do not see CL in the same way.

I know that absent days mean the days on which the employee is absent and therefore CL/SL is an absent day.

But, for the purpose of measuring absenteeism, is it proper to include CL/SL as part of your % Absenteeism? Or, show the effect of CL/SL on absenteeism separately instead of showing it in your regular indicator.

(If you have 12 days of CL in your company, then for sure you have 12 days of absence per employee out of the annual working days. Knowing that it is a permanent feature unavoidable and uncontrollable, is there any point in including this in the indicator and getting lost as to the actual controllable quantum of absenteeism?

What is the practice in Indian Companies?

Can I please have some views and facts about practices here?

Thanking in advance,

With Regards,

Govardhan

Hi Goverdhan,

In my view, sick leave and casual leave, to which your employees are entitled with full pay as per the standing orders, ought to be excluded from the purview of absenteeism. These are the days on which an employee is authorized to be away from work with pay. It would be inappropriate to term it as absenteeism. Absenteeism is defined as the absence of a worker from work when they are scheduled to work and work is available for them.

When calculating the percentage of absenteeism, we always exclude the days of authorized absence from work.

Cyril

Dear All,

How do we calculate absenteeism percentage? Do we include CL, PL, SL, etc., or is it only LWP (leave without pay)?

Regards,
Sunaina

Dear Govardhan,

If you go through ESI, you will see that it is not proper to give SL to employees who are covered by ESI.

I had faced a similar problem earlier, and what we did was to club all the leave under one head. There was no SL or CL.

The rules for Earned Leave were also changed, and only leave taken for LTA purposes was done in tune with the Income Tax Act.

There is nothing illegal because none of the Acts mention CL or SL. The only legal leave as per law is EL, so your employer's logic of putting them under absenteeism cannot be discarded completely.

Just tell me if they ask you which Act makes provision that CL or SL entitlement is there for workers. To be honest, there is none except if you have Certified Standing Orders that have included CL and SL.

Even under ESI, you treat the days as absent in case of Sickness Benefit (Recall the form you have to certify where you state the employer did not pay any wages for the period).

So, I feel you should club all the leaves together and put them under EL. Once EL increases, your employer will raise the issue, and there you can fight your case out.

Regards,

SC

Dear Swastik,

Thank you for your response.

The Tamil Nadu Shops & Establishments Act under Chapter VI on Holidays with wages stipulates that:

(1) Every person employed should be given 12 days of holidays with wages after 12 months of continuous service;

(2) Every person shall also be entitled during his first 12 months of continuous service and during every subsequent 12 months of service, (a) to leave with wages for a period not exceeding 12 days on the ground of any sickness or accident sustained by him and (b) to casual leave with wages for a period not exceeding 12 days on any reasonable ground.

So, it is legally mandatory to provide CL and SL in addition to EL (or PL) for the employees covered under the Shops & Establishment Act. I do not know about the Shops & Establishment Acts of other states, but this is the situation in Tamil Nadu.

If the establishment is covered by the Factories Act only, then the question of CL/SL does not arise.

Therefore, it is not prudent to club all the leave under the EL head if the employees are under S&E Act.

In fact, we made use of the term 'not exceeding' that quantifies the CL/SL in the TN S&E Act to provide 6 days of CL and 6 days of SL. The Certifying Officer could not raise an objection because the employees are also covered by ESI, and therefore he had effectively considered that we give 12 days of CL and ESI pays for sick leave.

In the absence of ESI cover, it is quite likely that the Certifying Officer insists on 12 days of CL + 12 Days of SL + 12 Days of EL.

Can you please give me some idea about what the leave rule is under the S&E Act of your state?

Regards,

Govardhan

Dear Govardhan,

Since S&E Acts are essentially State Acts, they do vary from State to State. If the TN S&E Act provides for CL & SL, then you cannot take it as absenteeism per se, but yes, we did handle CL and SL differently.

While making a list of Absenteeism, we also included the following categories of employees:

1) Intermittent Sick Leaves: Employees who used to take one or two days off at regular intervals (Less than two days did not require a Doctor Certificate, and we were exempted from ESI).
2) Clubbed Leaves: People who used to combine SL with Holidays and/or Earned Leaves.
3) Leaves to Evade Work: People who availed CL/SL at times when heavy work was scheduled to be carried out.

Here, we would like to mention that since there was a Multi-Union atmosphere, it sometimes became difficult to refuse CL and SL. I personally feel that you may suggest some criteria when including SL and CL as above.

Hope this helps.

Regards,
SC

This is amazing! I never knew how diverse Leave policies were. In Australia, it's very different. In many companies, Sick Leave is paid regardless of how many days you take per annum. For example, in our Banking Industry, three of the main banks pay unlimited sick leave!

Hi Suneeta,

The new employee must enroll in ESIC benefits within seven business days from their joining date. These seven days are for observing whether the person will work stably or not.

Reg,
B. Mohan Kumar

Hi Seniors, kindly let me know about leave with wages under the Shop Act (Rajasthan) and Factories Act. Are there any provisions for Casual Leave (CL) or Sick Leave (SL) under the aforementioned acts?

Kindly clarify one doubt: how many earned leaves can be carried forward as per the Shop & Establishment Act?

If your unit is in Gurgaon, then in accordance with the applicable Punjab Shops & Commercial Establishments Act, 1958, we can forward all earned leave (EL) every year, but we can only accumulate up to 30 days.

R N KHOLA