Can We Legally Remove Casual and Sick Leave Under the Factories Act of 1948? Urgent Help Needed

Hi, I can help you with that. In my company, we provide various types of leaves such as CL, SL, and EL. According to the Factories Act of 1948, an employee is entitled only to Annual Leave with Wages (Earn Leave). Now, I would like to revise our company's leave policy to exclude casual leave and sick leave. Is there any legal issue with this change? Are employees eligible for CL and SL as per the Factories Act of 1948?

URGENT PLEASE GUIDE ME

Due to the recession, we stopped giving OT payments in my company. Instead of OT, we are now providing Compensatory Off to the workers. However, they didn't understand this change, and now they are asking for OT payment or threatening not to come to work on National holidays. Okay, I will comply with the conditions as per the Labor Acts. Now, I also want to align with the Labor Acts. In my opinion, there is no law stating that employers should provide CL & SL to employees. Leaves are provided for employee welfare purposes.

Can I change my company policies as I like? If there are any legal issues, PLEASE ENSURE ME.

In my view, every employer should provide at least 8 holidays per annum and a 12-day leave policy that includes CL and SL. Overtime (OT) pay depends on the employer's capability, and it cannot be demanded by the employee unless it is specified in any of the documents.

As per the Factories Act, the employer should pay overtime at double wages. I am not discussing the leave policy regarding CL & SL. According to labor laws, is the employee eligible for CL & SL? If yes, please send supported documents.

It's a valid point. Even I noticed that only Annual Leave is mentioned, with nothing about CL or SL. Can anyone clarify if CL and SL are applicable to Officers, Managers, and Senior Executives who work in a manufacturing unit? According to the Act, every employee should be eligible for AL, including workers below the Executive cadre. Which one is correct? Please reply soon.

Dear,

As per the Factories Act of 1948, there is a minimum entitlement of at least 7 CL and 7 S.L. Therefore, it depends on the management to provide a higher minimum in this regard.

Dear Kailashkumar,

Thank you for your reply, but have you supported documents? I don't find any supported documents like this in the Factories Act, 1948. If you have any supported documents, please post regarding CL & SL.

Hi Sekar,

Wages are best associated with employee compensation based on the number of hours worked multiplied by an hourly rate of pay. Salary is best associated with employee compensation quoted on an annual/monthly basis.

Hi adminsupport,

Firstly, do not put your post or thread in between like this. This distracts from the main subject. You may ask your question in another post.

Raj

Dear all,

This is my first reply. The topic of the legality of CL and SL under the Factories Act could be sourced from the state factory rules or from the Labour Commissioner's office, where they will provide you with information on Casual Leaves (5-7) and Sick Leaves (0-15), varying as per state legislations. For reference, you can consult the Standing Orders officials in the Labour Department.

Brijesh

Leave cannot be claimed as a matter of right, and even annual leave cannot be granted to an employee when desired in an emergent situation, let alone any other kind of leave beyond what is prescribed in the Factories Act. Therefore, a company has the unfettered discretion to strictly adhere to statutory policies only. However, certain vital aspects should not be overlooked, as neglecting them could harm the company's interests.

The role of an HR manager is complex and often results in discontent among employees rather than contentment. A negative attitude adopted by the HR manager can lead to negative outcomes such as decreased profitability and efficiency, as well as employee unrest, strikes, and lockouts, resulting in significant financial and reputational losses for the company. It is crucial for an HR manager to maintain a positive approach. Granting leave to employees in times of need fosters loyalty and respect towards the management. Throughout my 39+ years of service, I prioritized the well-being of employees, which garnered their trust and cooperation. By allowing occasional short leaves and overtime when justified, I ensured a productive work environment, reflected in superior results compared to other units.

Legislative acts establish mandatory provisions for companies to comply with, setting minimum standards for employee facilities, while additional benefits depend on the organization's management policies.

Efficiency, excellence, and economy should be the guiding principles of any organization. Employee efficiency directly impacts the organization's overall performance. Therefore, the HR manager must formulate policies that support and enhance employee efficiency, avoiding any intentional or unintentional hindrances. Rigid policies are counterproductive, leading to worker unrest. HR management should focus on motivating employees to contribute effectively to the company's profitability through long-term, positive policies.

Collaboration between HR and Finance departments is essential for achieving organizational success. The current economic challenges, often attributed to unethical practices in certain organizations, should not be exploited by others. Management should engage with employees and unions respectfully, addressing concerns with gratitude rather than obligation. While casual leave is essential for addressing emergencies, sick leave may require compassionate consideration, such as providing financial support during long hospitalizations. Delegating decision-making authority to immediate supervisors ensures that employee needs are met efficiently, fostering loyalty and attracting talent.

National holidays are paid, and employees called to work on these days should receive compensatory overtime. Flexibility in granting compensatory offs for working on other holidays is crucial. HR should adapt to the evolving needs of the organization while prioritizing employee welfare by allowing casual and sick leave. Ultimately, a flexible and empathetic HR approach is vital for organizational success.

P.S. Dhingra

Vigilance and Change Management Consultant

Though, as per the Factories Act, only annual leave is to be provided, in respect of those covered under ESI, they are entitled to Sick Leave for which they receive payment from ESI. Regarding CL, the Model Standing Orders under the Standing Orders Act provide for CL of 8 days. Therefore, when we seek certification of standing orders, drafted based on model standing orders which we typically do, the Certifying Authority ensures that we include provisions for CL. Hence, CL is a provision we must provide for.

In addition, the Shops and Establishment Act also allows for CL for a maximum of 12 days. Therefore, we must acknowledge the principle for extending a particular leave. As per labor law provisions, no worker can refuse to work overtime as long as we comply with the provisions.

DN Rao

Dear Pavani,

Mr. Dinghra is right. Also, just because a company is in a recession, the leave privileges cannot be stopped or denied under the Shops & Establishment Act of the pertaining state. Overtime is not mandatory. CL/SL are compulsory. Many of the members here have suggested the minimum number of leave days allowable under different states.

Leave days cannot be written off but carried forward to the succeeding year and accumulated. If things improve next year, take a long leave or encash it. Else the excess days may be wasted. This is the process that has to be done with the approval of management and strictly followed by HR without prejudice.

Regards,
Chandru

Dear All,

Please let me know about the unauthorized letter's signature. If any employee has been absent without authorization for the last 10 days, we want to send a letter to him. Who is the right person to sign that letter? Should it be the Factory Manager or someone from HR?

Please reply promptly. Your cooperation is appreciated.

Manoj Kumar

Dear Pavani,

The Factories Act of 1948 provides minimum coverage for employees. An employer can grant additional leave in whatever terms they see fit to meet their operational requirements. You may want to investigate why Casual Leave (CL), Earned Leave (EL), and Sick Leave (SL) were initially established. This will help you justify any future actions by explaining that these entitlements are no longer relevant to current operations. However, once such entitlements are granted, they may not be easy to revoke unless you can offer something better or more suitable in return. Good luck.

Dear folks,

I will clarify the Factories Act for you. As per the Act, the employer need not provide any sick leave or casual leave. You are only liable to give earned leave of one day for every 20 days of work done in a calendar year. If the worker or employee has not completed 240 days of work, you need not provide any earned leave to the concerned worker.

Regarding the withdrawal of sick leave and casual leave which are already existing - if the employees don't resist, there is no issue. Otherwise, they may raise a dispute under Section 2(k) of the ID Act in the labor court, claiming that you have deprived them of facilities they were enjoying, though they are not entitled to them by statute. Any customary practice may become a rule of right at a later date, which all HR managers should keep in mind before implementing any welfare changes in a company.

However, if you want to make any changes as stated in Schedule IV of the ID Act, you must issue a notice at least 21 days before implementing such changes in the conditions of employment, as per Section 9A of the ID Act. Therefore, any welfare benefits already given can be withdrawn if you provide better welfare than the existing one, enabling the change to take place.

Hope this clarifies things. Regards

Many companies have different practices. Large business houses usually require signatures from the Department Heads, while small business establishments use their HR manager's signature. As long as the action does not lead to severe consequences like termination, any person authorized by the Board of Directors can sign. However, if it may result in termination, the signatory should have the Board's authorization to issue such letters, including a charge memo.

Nagendran B
GM - HR
Same Deutz Fahr - Ranipet

You cannot change. Withdrawing the existing facility, if any, even if it is more than an act of will, will be treated as a change in the service condition of the employees. If anyone approaches the court, your management will be punished. Please contact a good legal practitioner on labor issues.

Regards,
Dr. Shiva Prasad
Bangalore

Unauthorised Absence

Hi Manoj,

This is with reference to your query about unauthorized absence. Undoubtedly, the authority competent to sanction leave or the authorized HR personnel is fully empowered to sign the letter of unauthorized absence based on the report of the immediate superior/foreman of the unit.

P. S. Dhingra
Vigilance and Change Management Consultant

Dear Pavani & Friends,

While the Factories Act talks about annual leave with wages, the mention of CL, EL, etc., would be found in your Certified Standing Orders or the Model Standing Orders, whichever is applicable to you. Sick leave provision is based on the ESI Act requirement, but even if you are an exempted establishment, the provision has to be complied with. Hence, the requirement of CL, annual leave, sick leave are mandatory provisions and cannot be tinkered with.

One more important thing to note is that leave is a matter of custom or privilege, and any changes therein can only be made after giving a Notice of Change as per the ID Act provision and following the procedure therein.

Regards,
KK Nair

It depends on the contents of the letter proposed to be sent. If it is a letter advising the concerned employee to report for duty, it can be signed by either the Department Head or HR. However, if HR signs the letter, information should be shared with the Department Head so that he/she is aware of it.

If it involves "dispensing with services" due to "voluntary abandonment of service," there are two ways to handle it:

1) It can be issued by the Disciplinary Authority as specified in the company's certified standing orders, Discipline, Conduct & Appeal Rules, or any other relevant rules.
2) It can be issued by HR after obtaining approval from the Disciplinary Authority and wording the letter appropriately to indicate that it is being issued with the approval of the Disciplinary Authority.

To avoid any potential issues, whether in a Court of Law or otherwise, it is suggested that we opt for alternative (1) above.

DN Rao

Dear Pavani2646,

Factories Act deals with Annual Leave only (EL). However, new employees who join in the middle of a calendar year cannot avail these leaves as there will be no credit in their account. They can only utilize them in the following year based on the accumulation in their account. Therefore, adhering to the principle of natural justice, companies also provide Casual Leave (CL) and Sick Leave (SL) in addition to Earned Leave (EL).

If your organization is governed by the Shops and Establishments Act, then there is a provision for Casual Leave (CL). Generally, leaves are granted based on company policies, except for annual leave with wages.

Thank you.

Dear Friends,

Are all employees in a factory entitled to overtime payment (double wages) if they stay after 8 hours in a day?

Regards,
Swarnali

Please let me know if an employer denies giving CL/SL/EL facilities to their employees, what action should be required from the employee?

As rightly pointed out by Mr. Dhingra, the standards of conditions of service prescribed by any Labour Law would be the minimum to ensure consistent retention of the productivity of workmen. So, if you are providing a concession not provided for in a particular statute, it in itself cannot be a valid reason for its withdrawal. With the passage of time, it has assumed the status of a conventional concession or a customary right of the workmen, which cannot be changed prejudicially without complying with the provisions of Section 9A of the Industrial Disputes Act, 1947.

Psychologically, there is an atavistic urge in man to despise work. But he is compelled to work for the sake of his subsistence. When his work becomes highly organized and systematic, his hatred for work also becomes more pronounced and results in lesser productivity or absenteeism. So, the Law sets the minimum standards of working hours and leave provisions depending upon the nature of work and the exigencies associated with it.

Someone else raised a question about the necessity of various leave concessions for gold-collar employees. Of the major factors of production, men are the most sensitive and volatile and hence the most unpredictable, for their activities, irrespective of their employment status, extend to larger spheres of family and society beyond the sphere of work. It is, therefore, quite natural that whether an employed person is a General Manager or an ordinary workman, he cannot be indifferent to his family obligations and social responsibilities. Hence, leave becomes an inevitable and important condition of service. However, it cannot be a matter of right so as to meddle with the flow of work of the organization. That's why the prerogative of prior sanction is vested with the employer.

Hope all your doubts are cleared now!