Is Our Company's Leave Policy Fair? Seeking Insights on Earned Leave Practices

Dear Senior, Our company follows the rule as mentioned below: 21 Days Earned Leave divided by 12 months equals 1.75 days of leave per month only. No other leaves follow. In case there is one instance of absenteeism every month, then these 1.75 days of leave are forfeited (no payment is given for absenteeism, and no leave is granted).

Policy Inquiry

Is this the right approach? Do other firms follow this policy, or is this solely our company's strategy? What should I ask management?

Thank you.

Hi, the same situation is happening in my company. Could someone please advise us on what we should do in such a situation?

Regards,
Suchita

Hi Manoj Devda, I have a small query. Do you mean to say that if there is one instance of absenteeism every month, then the 1.75 days leave is deducted entirely, or will 0.75 days be left in the leave account?

Regards, Manoj Devda

Is Your Company a Proprietorship Company?

What you mentioned is illogical, and no company will follow the policy of Earned Leave like the way your company follows.

Regards

One absence in one month means the 1.75 leave stands canceled (even if the absence was without pay), i.e., 1 absence = loss of pay + 1.75 stands canceled.

Company Structure

Our company is a private limited sister concern company of a very large parent company in Mumbai.

Regards,

If your company is registered under labor law, then you must have filled the company standing order. Kindly go through that; you will get your answer.

Regards,
Deepak

I think the process followed by your company is simply ridiculous because you cannot have dual standards. I mean, if you are absent once in a month, you should not face dual punishments, i.e., loss of pay and simultaneously leave cancellation. I also believe the company is taking advantage of the employees' lack of knowledge or awareness regarding leaves.

My Suggestions:

1. You can inform the management that this process is not appropriate.
2. They should deduct leave from the account if you take a single leave in a month. Additionally, 0.75 should be carried over to the next month as it will make a difference (0.75 * 12 = 9 Leaves).
3. They can mark loss of pay in cases where the leave is not uniformed or if there are more than 1 leave in a month.
4. Request them to reconsider this rule as it puts employees at a disadvantage from both ends.

Regards,
Manoj

Dear Yasmeen, I would like to know the duration of your service in the current organization or whether you are a confirmed employee. Basically, earned leaves are meant for confirmed employees (on a pro-rata basis). It would be advantageous for you to review your organization's leave policy. Any leave is calculated yearly rather than monthly. According to labor law standards and company norms, a certain number or percentage of unused leaves must be carried forward to the next year.

Regards.

I fully endorse the views expressed by Shri Manoj Ji and Shri Amal Mondkar Ji. I feel that there is some confusion in the minds of the people regulating the grant of leave and drawing salary in the firms where Yasmin Ji and Sucheta Ji are employed. The affected employees may meet the bosses and explain to them that one day of absence from duty in a month is genuine and should be regularized as leave due, with salary drawn for it, as well as the balance leave carried forward. If leave is not granted at all, and all absences are treated as leave without pay and allowances, what is the purpose of 21-day PL? If the employers have some problem in understanding these, the employees may demand 12 days of casual leave and 9 days of PL instead. Somehow the employees' problem must be addressed to their benefit with retrospective effect.

Violation of Leave Rules

The leave rules are a violation of both the Shop and Establishment Act, the Factories Act, and other regulations. I think the Payment of Wages Act also has some rules on leave. You can actually take action on them under labor laws. Of course, in the end, that goes nowhere if you wish to continue working in that company.

Entitlement Under the Shop and Establishment Act

Under the Shop and Establishment Act, you are entitled to a certain number of days of leave for every year of work. This cannot be reduced for absence as long as you have worked for more than 240 days in a year (varies from state to state). No rule allows employers to disallow the accumulation of leave for absence in a particular month. It will probably qualify as unfair labor practice.

Action Steps

You should probably bring the regulations to the notice of your management. Also, highlight the section that clearly states that no negotiated settlement can reduce the entitlement.

There are penalties and criminal penalties for violating these regulations, which your management probably does not know.

Thank you so much for supporting me in this discussion. With your support, I have presented my opinion to my boss. If the company continues with the same approach, I will make the decision that is best for me.

Thank you once again.

I agree with the last statement. First, check your rules of employment because in some companies, off-role employees and employees on probation do not accrue any leave balance in their accounts.

Dear Yasmin, I also agree with Manoj. Your employer can't penalize you twice for absenteeism. First, you should check the Standing Orders of your organization and then talk to your employer. They are simply exploiting you due to unawareness. As per my knowledge, it's also illegal.

Regards,
SUBRATA

Dear Meenakshi,

The employee is a confirmed and regular employee of the company. Overall, the parent company has more than 1,500 staff but is divided into sub-companies and third-party roles. Hence, none of the employees are directly connected to the parent company except for some top management and accounts staff. We are in one of the sub-companies of the parent company with no PF/ESI benefits.

Leave Policy and Company Practices

My boss is saying that the leave policy depends on the company, and this is their company policy of loss of pay and cancellation of leave for even a single absence. But thankfully, I come from a background where I worked in an HR role and have been in the Cite HR for a long time, so my knowledge is updated about the compliances. The HR seniors at Cite prove my knowledge and experience to be correct, and I receive support to stand against such unethical practices.

Regards.

From your description of your company, it does not seem to be a correct choice of employer for you. You should look for a different job, irrespective of the outcome of your discussion with the management.

Any company that splits into multiple companies to avoid statutory obligations is on the wrong path. It will never grow. It sounds like the old Lala companies (no racist offense meant to anyone here on the site) that are out to exploit workers. Whatever you do, they will find another way to squeeze/suppress/exploit the workers.

If your boss says leave rules vary from company to company, please tell him that while the statement is true, no company-made rule can deny statutory rights given by law. At best, it can give better rights.

We also use contract employees and associate firms where some of our team are employed, but that is due to structure (multi-city hubs) and logistic reasons. When the main company went over 20 employees, we gave people the option of PF. It's the requirement as you grow. It's a part of the cost that you need to absorb and factor in.

Best of luck in convincing your management. Will appreciate if you keep us informed of your success or otherwise.

I totally agree with Yaasmin. Unless the Factories Act is amended, employers will not sanction any leave. It is crystal clear that employees are being exploited. What to do? It is a matter of survival. No one can raise their voice and risk getting burnt. Only we can appeal to the government to amend the Factories Act, providing sick leave, maternity leave, and paid leave very clearly.

Regards

Dear Yasmin,

It looks like your company's leave policy is not employee-friendly. I have identified two key issues here:

1. Leave
2. Absence

Earned Leaves (ELs)

Earned Leaves are akin to bank accounts. They are accrued after serving for a certain period and then utilized by taking leaves. Therefore, point 1 is acceptable when a leave is taken. On the other hand, point 2 refers to an unauthorized absence from work, which is usually punishable by deducting a day's salary for each day of absence. Deducting the ELs (leaves that are already credited to an employee's account) does not seem appropriate for instances of absence.

Sick Leaves (SL) and Casual Leaves (CL)

Additionally, there is no mention of Sick Leaves or Casual Leaves in your policy, which I believe are essential components of a comprehensive HR system.

Best regards,
Mr. Priyadarshee Pradhan

Eligibility for Earned Leave (EL)

EL is applicable once the employee becomes permanent. During the probation period, the employee is not entitled to any leave. Hence, it is pertinent to know your status—whether on probation or confirmed.

Concerns About Leave Deductions

Secondly, deducting pay and also loss of leave is ridiculous. It is against all labor laws.

I had previously mentioned that all the employees (for whom this matter is relevant within the company) have completed more than 6 months of probation.

Regards,

Dear Yasmin,

Types of Unplanned Leaves

There are two kinds of unplanned leaves: CL and SL. SLs are also a must as you never know when you might need to take a leave due to sickness.

Ideal Leave Structure

The ideal leave structure could be the "1 leave earned for 20 working days" rule. So, in a month, it becomes 1.5 EL (Earned Leaves) which can be credited to the employee. This amounts to 18 ELs (1.5 x 12) per year. Along with this, there are 8 CL (Casual Leaves) which are unplanned and cannot be combined with any other leaves, and can be taken for a maximum of 2 or 3 days at a time. Additionally, there are 7 SL (Sick Leaves) for sickness.

At the end of the Leave calendar, which runs from January to December, the remaining EL and SL get carried forward to the next year, while CLs lapse.

Annual Leave Summary

In general, in a year, it looks like this:

18 (EL) + 8 (CL) + 7 (SL) = 33 + 8 (Govt./Festival holidays) = 41

You can reward people who have not taken SLs for good health and EL/CL for excellent attendance. Please note that only EL is considered for Leave Encashment. Anything exceeding 60 ELs can be encashed by the employees.

Best regards,

Priyadarshee Pradhan

This is only because of the unawareness of the company staff; otherwise, no company can deduct the leave balance and make no payment for an absence of one day. It is unlawful.

Before taking any action in this regard, please refer to your company's leave rules and the eligibility criteria for earned leaves (EL).

Regards,
Gautam Kumar Gupta

Dear Friends & Seniors, Thank you for your efforts and responses. I am approaching my management with the help of your suggestions. I have also conveyed the suggestions that were discussed here. Let's see what decision will be made. If it favors the exploitation of employees' rights, then there is no point in suggesting or correcting them.

I am very happy to see the overwhelming suggestions and responses to support me. You all give strength and support to those in need at the right time.

Now, this site has become a part of our life. It is like senior guidance showing us the right path each and every time, with our initiative to correct the HR functions in particular firms.

Regards

Absenteeism and Leave Management Policy

If an employee in your company is absent without providing any information, the employee is simply considered absent, and the equivalent amount of that day's wage is deducted from his/her monthly salary. However, at the end of the year, according to leave management, if the employee has a balance of more than 21 leave days left, then the company has to pay for the remaining leave days.

On the other hand, for the sake of the company, if an employee is absent multiple times without providing any information, the employee may be considered undisciplined and may be terminated from his/her job.