Understanding Paid Leave for Contractual Laborers: What Are the Rules and Calculations?

Dear All,

Would someone help me to know:
1) Whether paid leave is applicable to contractual laborers working as daily-rated employees?
2) How many paid leaves have to be given?
3) What is the percentage to calculate paid leave?

I hope for your fruitful response.

Thank you.

Normally, paid leave accrues to every employee who has completed 12 months of service. As such, all employees, irrespective of whether they are daily rated or monthly rated, are entitled to get earned/paid leave once they complete 12 months of service. The rate of leave, however, differs from industry to industry.

Therefore, an establishment covered by the Factories Act or Plantations Labour Act will have to give leave at the rate of one leave for every 20 days worked by the employee in the preceding year. If it comes under the Shops and Commercial Establishments Act, the leave rules will be different since each state has its own Act. In some states, it is 12 days leave. Under the Shops and Commercial Establishments Act, in addition to 12 days Annual Leave, there are provisions for 12 days Casual Leave and 12 days Sick leave per year. It may vary from state to state since Shops and Commercial Establishments Acts are state Acts.

Regards,

Madhu.T.K

Can earned leaves be surrendered in lieu of the notice period at the time of resignation? For example, I have 83 earned leaves at the time of resignation, and the notice period is three months. If I work for one month and surrender my earned leaves for the next two months of the notice period, will this be acceptable to HR? Is there any legal basis for this?

I hope this helps clarify the situation.

There is no illegality in surrendering earned leave in lieu of notice pay because it is only an account adjustment. That is, instead of paying leave surrender to the employee and collecting notice pay from the employee, adjusting the leave to notice.

Regards,
Madhu.T.K

You have to specify where you are located because the labor rules differ from state to state. In Andhra Pradesh, contract workmen are also eligible if they have worked continuously for 20 days. If wages are paid daily, issues may not arise. If wages are paid weekly on a daily basis, issues may not arise. However, if wages are paid monthly based on daily wages, it should be considered. Leave can be accumulated or availed; this decision can be taken by management and should be consistent for all (accumulation for one and monthly availing for another), either accumulation or avail.

Yep, Madhu.T.K is right. It would come down to understanding between your HR and your reporting manager. Some companies allow the paid leave to go against the notice period.