Compensatory Offs: How Should They Be Calculated During Final Settlements?

If I am right, I think compensatory offs can be carried over only up to two months; otherwise, they will lapse.

Full and Final Settlement

While doing the Full and Final settlement, if the management decides to encash the pending compensatory offs, what should be the calculation method for staff and trainees? Please clarify my doubt if interested.

Regards,
Deeparaj

Dear Deepraj,

Understanding Compensatory Offs

Compensatory offs are entirely dependent on the company leave policy. If you have a policy, the period of lapse would be mentioned there. Normally, compensatory offs can be taken within a month or two, as you rightly said. If you don't have any policy, you can create a leave policy stating the rules of compensatory offs as well. However, if the management has not given the employee time to take their compensatory offs, you can carry them forward and, as the management has requested, give them the compensatory offs later.

Policy Creation and Approval

If the management is asking you to give the compensatory offs in full and final settlement, it's better to first create a policy, get it approved by management, and then act accordingly as they have instructed you to do. Ensure all the points are clear in the policy.

Calculation Method

Regarding the calculation, you can calculate the compensatory offs as you calculate other leaves (by considering basic + D.A * number of compensatory offs / 26). You can clearly mention this in the policy.

Hope you are clear.

Thanks,
Kalpna

Dear Deeparaj, Please find the details regarding the Compensatory Off procedure. If a person works on Sunday, they should be given a Compensatory Off within the next three days, i.e., by Wednesday. Otherwise, one cannot be permitted to work for more than 10 days. The following wordings have been interpreted from the Factories Act 1948:

• The workman should have one holiday for a whole day in a week. Where he is asked to work on his scheduled weekly holiday, he should be given a compensatory holiday within three days of his scheduled weekly holiday. {Section 52}
• After obtaining approval from the Inspector of Factories, the workman shall be allowed to avail the compensatory holidays unavailed by him, within the month during which the compensatory holidays are due or within two months immediately following that month. {Section 53}

With warm regards,

S. Bhaskar
[Phone Number Removed For Privacy Reasons]

Compensatory Offs as per the Factories Act 1948

As per the Factories Act 1948, more than two months are permitted to avail of the C-Off. Other than the month in which the work for C-Off is done, the next two months' time is to be allowed to avail of its compensatory off. For example, if the work for C-Off is done on 1st July, compensation should be allowed until 30th September, which is approximately 3 months.

Regards,
Abbas.P.S

Compensatory offs vary from company to company as it's purely dependent on the policy they have. If your management is ready to encash pending compensatory offs, then the same calculation can be followed as done for leave encashment in full and final settlement.

- Babu

Dear Bhaskar, As you have emphasized availing C-Off within the next three days, I felt your quoting was only to support that point. I didn't go through the second clause, which I didn't expect. Sorry for the inconvenience.

Regards,
Abbas P.S

Understanding Compensatory Offs (C/OFF) for Full and Final Settlement

This is as simple as the leave. First, clear the doubts underneath before going through the following checklist:

1. Pay C/OFF within the stipulated period as per the company rules.
2. Ask for the calculation of C/OFF based on Gross Salary or Basic + DA, etc.
3. Inquire about the calculation of days, whether by 26 as per MMW or by month days i.e., 30, 28, 29, 31.
4. Ensure that the maximum C/OFFs to be paid are once in F&F.
5. Verify the C/OFF day working hours - if one has worked for a half day, what provisions are there to receive full C/OFF pay or half-day pay.
6. Note that in most companies, C/OFF is only paid to worker level, not to executives and upper levels - Check as per company policy.

Considering all the points mentioned above should be sufficient to clarify your doubts and ease your calculation of C/OFF for F&F forever.

Regards,

Compliance with Legal Provisions in Company Policies

Company policies cannot overrule the basic provisions of the law. If time off has to be given within three days of working on an off day, it means "three days." You cannot create a policy that bypasses the provisions of the law. In such an event, your entire policy will be ultra vires to the law and will be struck down in no time. Please do not think that you can do whatever you like to frame your policies. The policies must be within the ambit of the law and should be respectful to the law and the employees.