Redesigning Leave Policies: Seeking Advice on Legal Implications for IT Companies

Dear All,

This is Sarang here.

I am redesigning the leave policy for my company and I want some help regarding the legal implications.

The current scenario is as follows: trainees are entitled to 7 leaves during the 6-month probation period. This policy applies to all new joiners, whether they are fresher or experienced. Once the probation period ends, the employee is entitled to 7 casual leaves and 7 sick leaves. After completing one year, the employee will be entitled to Earned Leaves at a rate of 1 leave for every 10 working days.

Proposed Scenario:

I want to simplify this structure and design something like 7 leaves for the probation period. Once the probation period is completed, the employee will be entitled to 22 Earned leaves. Please let me know if there are any legal rules that support this change. As we are an IT company, we are not covered under the factory act, and most IT companies are following a similar structure. I kindly request all of you to inform me about the process.

Kind Regards,

Sarang Kamalakar

Hi Sarang,

I am also working for an IT company where we have a policy of 6 sick leaves, 6 casual leaves & 12 Privilege leaves. Basically, we wanted to keep 24 leaves in total for a year for a permanent employee. (We have a 6-month probation period). So we have distributed these leaves as above. You can keep your leave structure as per your company standards and comfortability because there are no such legal rules applied for Leave Policy.

Also, we have no leaves sanctioned for employees who are on the probation period because we already have the 2nd & 4th Saturday off. Do let us know if you need any other help besides this.

Sapana Kale

Dear Sarang and Sapana,

The leaves are normally governed by the Factories Act in the case of the manufacturing industry and the Shops and Establishment Act of the state for industries other than manufacturing. Since in IT/ITES, there is no manufacturing activity, we are governed by the Shops and Establishment Act of the state that we are located in.

Leaves are a matter of right conferred to the employees by any of the abovementioned two acts. However, prior approval is a must in cases other than sick leaves. The issue is that the moment you tell the employee that their annual entitlement is such and such, they would prefer to exhaust the entitlement within the year, especially where a particular type of balance leaves e.g. CL will lapse by the end of the year.

The leave policy is to be made in such a way that the employees may avail leaves in the year for rest and recuperation, without affecting the productivity of the organization.

Best wishes,
Sunil Joshi

Hi,

We have this provision in the Industrial Act that the employer can grant leaves as per the law. However, casual leaves cannot be less than 12 as mandated by the Industrial Act. For manufacturing units/factories, a minimum of 18 Paid Leaves (PL) must be provided to workers. In cases where the employer offers better privileges than those prescribed by the Industrial Act, the latter would be preferred. It depends on the HR policies of the company and what the management chooses to provide, ensuring the best for the employees.

Suresh

Hi Sarang,

Thank you, Sunil, Suresh, and Sapana, for your help.

The basic problem I am facing is related to the Bombay Shops and Establishments Act, which states that 21 leaves should be allocated. Now, as I am restructuring the leave system, do I need to consult a labor consultant or consider the legal implications of this restructuring?

Please advise me on this matter.

Kind regards,
Sarang

Dear Sarang,

No, you do not have to take any type of consultancy from any labor consultant. Kindly note that the leave system you are planning is better than what is given in the Factory Act. So, it will be appreciated by the Labor Welfare Department.

Suresh Sharma

To citehr,

No, you do not have to take any type of consultancy from any labor consultant. Kindly note that the leave system you are planning is better than what is given in the factory act. So, it will be appreciated by the labor welfare department.

FROM RICHA