Is It Legal for Companies to Lapse Earned Leaves? Seeking Clarity on Employee Rights

Recently, my company (Gurgaon-Based Telecom Company) has changed the policy for earned leaves. Here is the extract from the policy.

Earned Leave Policy Update

To achieve a greater work-life balance, employees will now be encouraged to take annual leave to rejuvenate themselves and enhance their quality of life. An employee will continue to be entitled to 25 days of earned leaves in a calendar year, which are credited in two equal installments of 12.5 days each, in the months of January and July. Henceforth, earned leaves, if unavailed, can be accumulated up to a maximum of 30 days. Once the maximum limit of 30 days is accumulated, 50% of the unavailed leave balance as of 31st December will be encashed and paid along with the January payroll in the following year, and the balance 50% of unavailed leaves will lapse.

My question is: Is it legal to lapse employees' earned leaves? Is there any act that supports that? Can we challenge it?

The maximum number of earned leaves that can be accumulated by the employer cannot be less than what is allowed by the law applicable to your establishment—whether it is the Factories Act or the Shops and Establishments Act. You have not specified the law that is applicable to your establishment.

Regards

Dear Mr. Vector,

The maximum number of earned leave that is allowed to be accumulated by the employer cannot be less than what is allowed by the law applicable to your establishment, whether it is the Factories Act or the Shops and Establishments Act. You have not specified the law that is applicable to your establishment.

With regards,

Hello Sir, thanks for your reply. My company's name is Ericsson India Global Services Pvt Ltd. I don't know under which law it comes. How do we find that out?

There seems to be no legal ambiguity in the company's policy. The company encourages employees to avail leave every year. Leave lapses even in Central Government Rules for their employees if it exceeds beyond 300 days.

The Government of India allows the accumulation of earned leave up to 300 days for all categories of employees. There is no ceiling for half-pay leave. It can be accumulated to any number of days and availed of either on medical grounds after commutation into full-pay leave or as half-pay leave as per the choice of the employee. If you are not happy with the amendment in your leave rules, I suggest that instead of thinking to challenge it in a labor court or civil court, you may think of setting up a welfare committee of employees and through it, negotiate with your employers for the betterment of leave rules as well as other matters. That would be more convenient and more fruitful instead of litigation. So please consider setting up a welfare committee (not a trade union, please) with other fellow employees and approach your employers for negotiations. Give the management a better proposal for leave policy and take their consent to it. I also request you to please post your experience here in case you work on this suggestion.

Thanks and regards.

Hi all,
Why are we thinking of "LAPSE"? Why can't we encourage employees to avail their Earned Leave (EL) to maintain a balance in work/life, while ensuring that the business objectives are not compromised? For this, all employees need to plan their leave, and departmental heads have a significant role to play in this planning process. To facilitate smooth planning, employees could be allowed to take leave twice a year, if necessary.

In extreme cases where an employee is not permitted to take leave by the organization due to operational requirements, the company should have a policy to allow the encashment of unavailed leaves at the end of the year.

Legal Aspects of Lapsing Earned Leaves

Seniors - "Is it legal to lapse employees' earned leaves?" This question still remains unanswered.

Regards,
Sripati

Is it Legal to Lapse Employees' Earned Leaves?

Sripati,

The term EL refers to Earned Leave. It should be encashed if unavailed. I don't think it lapses, though I am not a lawyer. Lapse should not happen as per legal provisions. Let the experts comment on this.

Private companies encash such leaves.

Pon

Earned Leave Accumulation Under Various Acts

The maximum amount of earned leave that a worker can accumulate under different laws regulating working conditions, such as the Factories Act, the Plantation Labour Act, and the Mines and the Shops and Establishments Act, is limited by the respective Acts. Therefore, if not availed within a specified time frame, it cannot be availed by the worker subsequently. For governments, the leave rules are different, and in their case, earned leave is also not allowed to be accumulated without limit.

With regards,
V. HARIKRISHNAN

Dear Pon, If an employee is not availing of leave earned by him/her for a considerable time, it means he/she is not willing to avail the benefit. In fact, making a provision for the lapse of earned leave is just to encourage him/her to take care of his/her work-life balance and avail leave, fearing that the same may lapse if not availed for any more time.

There is confusion regarding EL. Is it a lapse of total credit for 30 days? Please describe what EL is paid by the employer according to the rules after leaving the job.

Thank you,

Rabindra Thakur