Can We Remove Earned Leave in a 5-Day Workweek? Seeking Legal and Practical Advice

Hi,

I am working for a software company. Previously, we used to have a 6-day week, but now we have changed to a 5-day week. We would like to change the leave policy that we used to follow. Previously, it was 12 CLs, 12 SLs, and 15 PLs/ELs. Now, we want to reduce the CLs and SLs and remove the ELs altogether.

I would like your input on this matter. Can I remove the ELs from the leave policy? Will there be any legal issues if I remove the ELs completely? Alternatively, could you suggest the best leave policy that can be followed for a 5-day week software company, which would be justifiable to both the employer and employees?

Please advise.

Thank you,
Sandhya.

Dear Sandhya,

I do not know particularly about the 5-day week software company policies, but as per the Shops and Establishment Act, it is mandatory to give 21 days of leave divided into SL, EL, and CL depending on the company. You can give 6 SL, 4 CL, and 11 EL in a year. You cannot completely remove any of the leave. 21 days of leave are apart from national holidays and other paid holidays.

Please wait for some time for more suggestions.

Leave Policy Adjustments

Then, leaving with loss of pay could come into existence. CL and SL are not supposed to be encashed but can be carried forward to the next year.

Dear Sandhya,

As rightly pointed out by our friend Yaasmin, EL is mandatory. Usually CL and SL balances collapse at the end of the year, whereas EL gets carried forward to the next year. The balance of EL has to be reimbursed during the process of full and final settlement if the candidate leaves the services of his company.

Ours is an IT Company, and according to our leave policy, we credit 6 CL, 7 SL, and 8 EL to our employees. Even though we work 5 days a week. Apart from these 21 days of paid leave, we provide 2 optional holidays that an employee can opt to avail from the optional holiday list we provide, and apart from this, we give 13 days of National and International holidays. All these are paid holidays for the employees.

If the employees exceed their leave limit, then that would be considered as loss of pay. If it's sick leave, then the employee should submit the supporting medical certificate for his/her illness. Advance EL will be approved for employees depending on their needs (e.g., Marriage/Medical treatment, etc.), and the same gets adjusted towards the next year's EL credit. In case the employee leaves his services within the same year after availing the advance EL, then the same gets adjusted in his/her full and final settlement.

- Babu