Understanding Privilege Leave: What Are the Legal Requirements for Small Companies?

Dear All,

Hi! I would like to clarify a few basic HR concepts with all of you:

1) Is PL given at the company's discretion, or is it necessary for a limited company with a staff of 15 to compulsorily provide PL?

2) What should be the minimum number of PL that a company has to provide? Our company offers 7 CL's and 8 SL's. Is this acceptable?

3) Can sick leave be accumulated up to a maximum of 21 days?

4) If a confirmed employee is terminated for reasons, is it necessary for the company to pay one month's salary, or can it be only 15 days? Is there any law governing this? If the company pays salary in lieu of notice, should the employee be paid their gross salary or only basic salary?

Please help out.

Regards,
Tittli

Hi Tittli,

Generally, in practice, when preparing HR policies, companies typically provide at least 30 days of leave in a calendar year in the form of casual, sick, and paid leaves.

This allocation is commonly divided as follows:

- Casual: 8 days
- Sick: 8 days
- Paid or earned: 16 days

However, the total can also be structured as 30 days, with the breakdown adjusted accordingly:

- Casual: 8 days
- Sick: 7 days
- Paid: 15 days

Paid leaves can be carried forward to the next year, but casual and sick leaves cannot be rolled over; they will lapse at the end of the year if unused. Generally, paid leaves are encashed upon separation from the company, although some companies may choose to do so at the end of the year.

Sick leave can be accumulated with the submission of a medical certificate and can be combined with casual or paid leaves. It's important to note that the total leave availed cannot exceed 30 days in a year.

If the appointment letter specifies that the company will pay one month's salary in lieu of the notice period, then the company is obligated to fulfill this. Additionally, if the appointment letter states that an employee will be terminated immediately for engaging in activities against company rules, then the notice period is waived, and the company is not liable to pay one month's salary.

I hope this clarifies your query.

Regards,

Amit Seth.