How Can I Revise Our Leave Policy to Meet Legal Standards and Employee Needs?

My CEO has asked me to revise the leave policy. We are a 5-day working company with a very small workforce. Currently, we have Saturday and Sunday as offs, along with 10 other holidays. We provide 5 CL, 5 SL, and 12 PL. He wants me to reduce these leaves to a minimum. Please advise on how many leaves I can reduce according to the law and employee welfare. Also, what is the minimum number of leaves we can offer employees post-confirmation?

Thank you.

The existing structure of leave you explained seems okay. Rather than reducing the existing leave, you may revise the structure, which will be beneficial to the organization. For example, if any employee gets 12 PL, they will be eligible for 3 CL and 3 SL. If any employee gets 14 PL, they will be eligible for 4 CL and 4 SL. In this way, you may also curtail some leave while ensuring that employees who work more benefit.

Then, you may check the percentage of total leaves availed by all employees in a year. Check the percentage of total CL availed against the total CL allotted to all the employees and the same in the case of SL as well, during the last year. Then you will find the ratio of availing CL/SL in a year and the average number of CL and SL availed by an employee in a year. If the leaves taken exceed the average leaves, they can be reduced if possible. Based on this assumption, you may set a certain number of leaves for CL/SL and propose a reduction in the number of leaves. In the case of PL, you need to follow the Factories rules, hence it would be as per the law only. Otherwise, in other cases, you can use sufficient statistical data to propose a reduction in existing leaves.

Hope this will work.

Regards,
Atul S Malve
Manager- HR & Admin

As far as PL is concerned, you will have to comply with the Factories Act, which stipulates one PL for every 20 physical working days. If your company falls under the Factories Act, then you will have to adhere to it.

Regards,
Col Rathore

I would like to add to the discussion. Please refer to the standing orders applicable to you and follow the provisions therein. As already mentioned, the minimum statutory liability is as provided under the Factories Act – 1 day for every 20 days worked after completing more than 240 days in the previous year (Section 79). If you are a small concern with no applicability of standing orders, provide one type of leave instead of separate categories like CL/Optional Leave/Privilege Leave/Annual Leave/Earned Leave/Sick Leave, etc. Simplify it into a single item and keep it straightforward.

Leave Encashment Policy

Regarding your boss's concern about saving working days, consider introducing a leave encashment policy that allows a fixed percentage of leave to be encashed every year from the accumulated leave.

Regards,
KK Nair

Dear Sonal,
You cannot reduce leaves as the Mumbai Shops & Establishments Act will be applicable to you. As per the Act, the leaves admissible are as follows:

- 3 Months of service: 5 days of leave for every 60 days of service.
- 240 days of service: 1 day for every 21 days of service.
(For counting service days, the days on which the establishment remains closed are to be considered as service.)

Hope it's clear.

Understanding Establishment vs. Factory

It is important to know whether yours is an establishment or a factory. It is a media company, but does it have a printing press? Some of the opinions given herein are incorrect.

Procedure for Reducing Leave

In case you are going to reduce the existing quantum of leave, you will need to follow a certain procedure.

With warm regards,

Regards,
[Name Removed For Privacy Reasons]
Mumbai
Email: [Email Removed For Privacy Reasons]
Mobile: [Phone Number Removed For Privacy Reasons]