How Do You Calculate PL for New Employees and Handle Sick Leave Carryover? Urgent Help Needed

Dear Seniors, please help me urgently with PL calculation. I want to know the process of how it is calculated with some examples. I have already gone through various posts on the same topic but am unable to find a satisfying solution. First, let me make you aware of my question:

I know that leaves are given per the calendar year period from January to December.

PL Calculation for New Employees

Now, let's assume an employee joined on 1st May '12. So, how will PL be calculated for him?

A contact of mine mentioned that if an employee joined on 1st May '12, then by December '12, there would be 8 months, and in January '12, 8 leaves would be credited to his leave account.

If he joins in January '13, no leave would be credited to his account. However, as per the Shops and Establishment Act, an employee is required to have completed at least 12 months of service to be eligible for such leave. Kindly enlighten me on this issue.

Carrying Forward Sick Leaves

Additionally, please inform me about the maximum limit for carrying forward sick leaves to the next calendar year.

I would really appreciate your quick response on this matter. I am awaiting your reply eagerly.

Thank you in anticipation.

Regards,
VSL

Leave Accumulation and Eligibility

For both sick leave and privilege leave, the accumulation period is 36 days. For privilege leave, an employee must complete 1 year to be eligible. For example, if an employee joins on November 7th, 2012, then from the next November 7th, 2012, privilege leave of 12 days will be credited to their leave balance. Sick leave will only be added after confirmation.

Best Regards,
Venkata Krishnan
Consim Info Pvt Ltd

Good morning and thank you for your valuable response on this. However, I still have a query regarding this. As per your example, an employee who joined on 7th Nov '12 will be eligible to receive 12 PL on 7th Nov '13 in their leave account after completing one year of service with the company. Now, what will happen on 1st Jan '14 regarding their PL? Since we need to maintain the leave account according to the accounting year, will it remain the same or change?

Also, what happens if an employee joins on 16th Nov '12? How many leaves will be credited into their leave account after completing one year of service?

I am eagerly awaiting your response on this as well.

Regards,
VSL

Policy for PL Credit

The main basic policy for PL (Privilege Leave) credit should apply only after completing 240 days in the company. If you are inquiring about the financial year calculation for PL, please note that we cannot align it with the accounting year. Instead of granting PL to individual employees, consider evaluating the employees' service in the company. For example, if an employee joined on January 1, 2014, in the next accounting year, you can add the leave balance of PL by 15 days for the employee from January 1 to April 1.

Regards,
Venkata Krishnan R

Dear Venkata Sir, I am concerned regarding PL grant as per the Shops and Establishment Act. What you have mentioned is as per the Factories Act. It will be really helpful if you could help me understand the process as per the Shops and Establishment Act's. I have stated above the eligibility criteria under this act, but wish to learn the process of crediting PLs in the leave account as per the example stated above.

Financial Year vs. Calendar Year

Also, please enlighten or comment on whether we can follow the financial accounting year (Apr to Mar) instead of the calendar year (Jan to Dec).

Your valuable response is awaited...

Regards

Eligibility for Leave Entitlement

Every employee who has served for a period of two hundred and forty days or more during a continuous period of twelve months in any establishment shall be entitled, during the subsequent period of twelve months, to leave with wages for a period of fifteen days, provided that such leave with wages may be accumulated up to a maximum period of sixty days.

Moreover, any continuous period of service in an establishment preceding the date on which this Act applies to that establishment shall also count. Additionally, any leave accumulated by an employee in an establishment under the law applicable to that establishment preceding the date on which this Act applies to it shall not be affected.

Furthermore, every employee in any shop or establishment shall be entitled to encashment of the leave with wages for a period of eight days in every year.

Leave Calculation Example

The counting of leaves will be communicated to employees on 1st January of every year. In your case, the employee joined on 1st May 2012. Therefore, he is eligible for 8 paid leaves, but he must complete a minimum of 240 working days in a year. Thus, we will provide leaves to him after the completion of a year. Subsequently, on 1st January 2014, we will allocate 8 PLs to him.

Wow! Perfectly answered! Now, I just want your confirmation on this calculation: As you stated above, 8 PL will be credited on 1st Jan '14. Then in the next year, i.e., 1st Jan '15, will he start getting the total number of PL granted by the company? Also, can we consider FY instead of the accounting year? Thank you.

Yes, from January '15, he will receive 15 PLs as granted by the organization. We will credit PLs in a calendar year, i.e., from 1st January to 31st December.