Is It Legal for a Company to Offer Zero Leave Days and Deduct Pay Without Notice?

A company I have recently started working for, where I am the only HR representative, grants no leaves whatsoever to the employees. There are no sick leaves, no casual leaves, no annual leaves. The management explains that until recently they had a 6-day working week at the office. Now they have made 2 Saturdays off, thus giving the employees 2 days off per month.

Thus the new rule is, "you don't come for work, you don't get paid." The employees have accepted this. The problem is that now no one informs the management before taking a leave; they just say, "if I don't come to the office, deduct my day's pay."

Now the management wants to deduct 2 days' pay for every day taken by the employee if not informed in advance.

Question: Legality of Leave Policy

My question is, how illegal is all this?

Prima facie, everything appears to be illegal. However, you could have given a little more information. We would like to know:

a) Your company is located in what state?

b) Is your company registered under the Factories Act or the Shops and Establishments Act?

Under the provisions of either act, employees are eligible for earned leave. The provisions of the act differ from one state to another; however, the minimum admissible earned leave is 15 days.

Instead of giving two Saturdays off, your employers can very well have a six-day week. By giving two Saturdays off, in fact, the management is giving 24 days off per annum unnecessarily. Rather than this, let them follow the route of the law to avoid legal hassles of any kind in the future.

Your management can declare that for every 20 working days an employee is eligible for 1.5 days of earned leave. This way, every employee becomes eligible for 18 days of leave per annum. This leave can be accumulated as per the legal provisions.

However, this may not be sufficient. You need to check the provisions of the law and find out whether you need to provide sick leave or casual leave to the employees.

Company Culture and Employee Reactions

Now, coming to the culture of your company. Your employees have reconciled to the deductions from their salary. They consider it a fait accompli.

I had a case wherein the owner of one company started withholding the first month's salary. This was done to avoid abandonment of employment by the staff. He thought that employees would be lured by their one month's salary and would give him sufficient notice to stop abandoning their employment. Nothing happened that way. Employees simply reconciled to the deduction of the first month's salary, and they continued to abandon their employment. Hardly anyone came back and asked for their money.

Cases like this happen because of a lack of legal awareness in India. Nobody knows what their rights are, and not many employers know in what legal framework they can run their business. They are so obsessed with their vision and mission that giving short shrift to the legal provisions hardly matters to them.

Regards,

Dinesh V Divekar

Beware of false knowledge; it is more dangerous than ignorance.

The company is in West Bengal. The management is happy to give Saturdays off since most people took leaves on Saturday, and those who did not were also unable to complete their work without their counterparts, thus decreasing the overall efficiency.

Is It the Right Thing to Do?

Fait accompli or not, is it the right thing to do? Can an employer legally deduct two days' pay for one day of leave?

Regards,
Yamini

It is illegal. You can deduct only one day's pay if the employee is absent for one day. I hope yours is a partnership/proprietorship company where the management will establish the rules as they see fit. It would be better if you speak with the management and convince them that it is wrong.

Instead, you can introduce an attendance bonus/rewards for the employees who come regularly to the office. If the employee believes that by taking one day's leave, they will be deducted one or two days' pay, then you cannot change the attitude of the employee/employees, and it will become the culture of the organization.

Introduce a new system where if you find some employees taking leave without informing, give them a warning letter, and a person receiving three warning letters will be terminated.

This is not only illegal but also a very unethical and unfriendly policy. It reveals the mindlessness of the organization. I suggest you bring this matter to the attention of the labor office immediately. It is also not necessary to mention your name.

Legal Aspects of Running an Organization

Your company's management needs to go through the legal aspects of running an organization. Make some notes and, if possible, extract some information from legal cases where action has been taken by concerned departments against companies for violations of acts.

HR Responsibilities and Actions

As an HR person, you need to take stern action against employees and ensure that their department heads also face consequences. Call a meeting of all department heads, establish a leave policy with action details if the policy is not adhered to. The most crucial aspect is to get written confirmation from department heads and employees if they take leave without informing.

There are other methods, but since your management is not professional, they will likely be more inclined towards reprimanding the employees.

Best of luck.

Regards,
Suresh Sharma
Kenhr Management Consultancy

This is ridiculous. How is it possible to operate without any weekly holiday? Even if the company is doing these unpleasant things, is there any other way to relax and refresh the mind?

The government should intervene to address and deter such activities.

This is not only illegal but also unethical to deduct 2 days' pay for 1 day of leave taken. This is the time for you to act and talk to the management. I can share one such experience of mine. I have worked in an organization where no leaves were given to trainees for one complete year. No Privileged Leave, Sick Leave, or Casual Leave. If leave was taken, accordingly, the salary would be deducted. This was applicable only to trainees. For laterals, all leaves (PL, SL, CL) were given. However, after raising our voice, within a year, the policy was changed, and now trainees have 10 days of special leave. My point is, if you take the initiative, there is a possibility for a positive change. Maybe stern actions against the rule breakers can help, but if you really want to help the organization and its people, I would recommend an open discussion forum between employees and employers regarding this issue.

Regards,
Rajeshree
Poresys Technologies

I have gone through all the comments. Yes, you are right. I myself run an organization and provide all the benefits to my employees, but I find it very challenging when both senior and junior employees disappear for one or two days after receiving their salary. As a result, my clients complain and deduct payment in lieu of that. I work in the service industry. Now, please advise what kind of penalties can be imposed on these employees under the law.

Thanks,
Indu

Dear All,

I am facing the same problem as I have just joined a new company, and I am the only HR in the factory. My management does not give any leave to the employees, and they deduct pay for every single day of leave taken as there is no leave policy in place.

I would like to know what the penalties or consequences of this could be. My factory is situated in Karnataka.