How Can We Create a Fair Leave and Attendance Policy That Balances Employee Needs and Company Rules?

Dear seniors, We are a company registered under the Factories Act, based out of Noida. In our organization, we provide 27 leaves per year (Leave cycle: Apr to Mar), i.e., EL-15, CL-7 & SL-5. The company has stopped Leave Encashment and Leave Carry Forward since 2008 and encourages employees to avail their leaves within the particular year/leave cycle. Any remaining/unutilized leave during the particular leave (including EL) cycle gets lapsed. Additionally, there have been raised points regarding the deduction of an employee's salary for the leave taken during their probation period. I hereby request you all to guide me in drafting a leave and attendance policy for my organization in a manner that takes care of both the staff and the company.

If you are registered under the Factories Act, you need to give only earned leave. However, if you have extended CL and SL, you cannot withdraw them now. Rules pertaining to EL shall be equal to or better than what is provided in the Factories Act.

Earned Leave

The Factories Act provides for one day for every 20 days of work, and one will get between 12 days and 15 days in a year. In terms of number, you have nothing to change. However, unutilized EL shall be allowed to be carried forward to the next year; accumulation is allowed for three years of leave. You can refer to the Factories Act for a more detailed calculation. Management cannot draft a policy stating that one should exhaust leave in the same year. Encashment of leave is not provided for in the Factories Act for employees who are in service. Only if an employee resigns or retires, the balance of unavailed leave shall be encashed. If you draft your own encashment policy, the Factories Act does not prohibit it as long as you provide for encashment at the time of resignation and retirement as well.

Casual Leave

There is no provision in the Factories Act regarding CL. It also cannot be carried forward and encashed.

Sick Leave

There is no provision under the Factories Act for SL. This also need not be encashed or allowed to be accumulated. However, allowing accumulation will help employees.

Regards,
Sivasankaran

Leave Policy Clarification

The words given by Mr. T. Sivasankaran are correct because Earned Leave (EL) can be carried forward, and if your company makes a policy for encashing, you can. However, there is no provision in the Factory Act.

Regarding Sick Leave, if your company implements a policy for carry forward, then you can do so, but it cannot be encashed.

Casual Leave (CL) should be availed by employees within the same year; it cannot be carried forward or encashed.

Regards,
Ashok
[Phone Number Removed For Privacy Reasons]
HR/Admin Officer

Thanks, Ashok, for the info. What if the EL is not being utilized, and the company also does not have a policy to carry it forward? Will there be any legal implications of the same?

The above suggestions will help me in formulating new policies for leaves. I just want to ask about maternity leave. Should I include it in my policy-making process? If yes, then for how many days? Please suggest on this. I am planning to make the policy easier. If I'll remove SL only instead of EL and CL, or if I'll go with EL only, will there be any problem? Whatever I am planning, it should be under the Factories Act. Please suggest.

Right now, we are having EL-15, CL-7, SL-7.

Thanks,
Liza

Maternity Leave Policy and Compliance

EL/PL/AL is compulsory to give, and maternity leaves are as per the Maternity Act, which means they cannot be deducted from the PL/EL/AL balance.

You can make the maternity leave policy as per the Maternity Act to avail maternity leaves for employees not under the ESIC Act, where ₹15,000 p.m. gross is the limit, and ESIC employees get maternity benefits from and under the ESIC Act.

In most organizations, employees are allowed to carry forward their earned leave (EL) to the next year, although there is typically a limit on accumulation. For example, if an employee has 22 EL days and the accumulation limit is set at 90 days, exceeding this limit, say to 105 days, would entitle the employee to encash 10 or 15 EL days based on the company's policy. Out of the total of 100 days, if 10 days are encashed, the remaining 90 days will be retained in the employee's account, while the excess 5 days will lapse. Sick leave (SL) can also be carried forward, but casual leave (CL) will lapse at the end of the year.

Regards,
Rachna