How Do Small Companies Like Mine Calculate Leave? Seeking Advice on Best Practices

Hi,

Could anyone be of help in explaining the system by which leave is calculated and the common practices.

Mine is a small organization with a workforce of 20, and I wish to institute a system of leave for the team.

Regards,

Rahul

Dear Rahul,

The leave is given on a calendar year basis, and looking at your organization's size, I am sure that you fall within the purview of the commercial establishment definition. You need to calculate 30 days of leave (the Act states not less than 21 days) per year basis, which needs to be accrued on a monthly basis, i.e., 2.25 days/month.

To give you an example, if Mr. A has joined in the month of March and taken 3 days of leave until the end of the year, then his leave balance by December 31st would be:
Total leave: 10 months * 2.25 = 22.5 days
Leave taken: 3 days
Balance: 19.5 days

Please revert in case of any other queries.

Dhole

Hi Rahul,

Thank you for your questions regarding leave policies.

Certain organizations follow the policy that new joiners during probation cannot take their accrued leave, which can be taken post-confirmation. Is this a prevalent and legally correct system?

Also, how does one decide on the maximum number of days of leave at one stretch? Is there any reference that can guide in finding details on paid, half-paid, and unpaid leaves?

Regards,
Dhole

Dear Rahul,

Though the leave rules are explained in the Shop & Commercial Establishments Act, white-collar employees and probationers can be governed by organizational rules and policies. The system of probationers not being given any paid leave does exist in various organizations, though it gets accrued and given after the completion of the probation period.

Dhole

Hi Rahul,

Please note the leave policy which is commonly followed in most organizations:

a. Casual Leave consists of 2 days per month (1 day for every 15 days worked).
b. Privileged Leave or Earned Leave is 15 days per year. If an employee has only taken 10 days in a calendar year, the remaining 5 days will be carried forward to the next year.
c. Sick leave is for 10 days and is subject to the submission of a doctor's certificate or discharge summary from the hospital or nursing home when the employee returns to work.

Leave is always calculated based on the calendar year January to December, although some organizations follow April to March as an exception.

Regards,
Sadashiv Rao :)

Nice information in this thread. My doubt is that 2.25 days of leave in a month, i.e., 27 days in a year, is divided into sick leave, casual leave, and all that. In my present company, we can take 8 casual leaves and 5 sick leaves in a year. Is this 2.25 rule given by the Indian Government?

One of my employees sanctioned a casual leave on the 10th, and as the 11th was a public holiday, he did not resume work on the 12th due to sickness. In our organization, taking 3 consecutive CL days is not allowed. Therefore, I deducted three days from his PL balance. Now, my employee is arguing with me to deduct 1 CL on the 10th and 1 SL on the 12th.

Kindly advise.