Introducing HR Policies in a Travel Company: How to Calculate Earned Leave for Long-term Employees?

Introducing HR Policies in a Travel Company

I am working with a travel company based in Karnataka. My company did not have an HR system, and the total concentration was only on operations. Now we are introducing HR in the company, and I am framing the policy and procedures for our company. For the leave policy, we have mentioned that the company will provide 15 days of earned leave. I have the following queries:

1. A few employees have been working with us for more than 3 years. How should we calculate their earned leave? Do we need to consider the previous years as well, or can we implement it starting from April 2013?

2. Can we consider the leave year from April to March?

Kindly suggest.

Regards,
Smriti

Dear Smriti,

As per statutory requirements, you are supposed to consider the calendar year only from January to December. Is your company registered under the Factories Act or the Shops and Establishment Act?

Regards,
K S T KRISHNA RAO
[Phone Number Removed For Privacy Reasons]

You will need to check the rules on the minimum amount of leave under the Karnataka Shop and Establishment Act. (Check the index and refer to the chapter on leaves). You must provide the minimum leaves specified in the act.

You need to give leave in the current year, proportionately to those who worked last year. The leave rules generally follow the calendar year. It is better to stick to that.

Thank you for your response. My company is registered under the Shops & Establishments Act. The act specifies that Paid Leave should be calculated as 1 day for every 15 days worked. Therefore, employees who have been working with us for the past 3 years should be entitled to 45 days of Paid Leave for this year. Additionally, these employees have taken leaves whenever they needed them, or they have been compensated for those days. However, due to the absence of an HR department, the details are not properly documented.

Please advise on the best course of action to address this situation.

Regards,
Smriti

Suggestion for Leave Calculation

My suggestion would be to compute leave due for last year's work and keep it at that. Leave must be credited to each employee's leave account on January 1 as above (1 day for every 15 days worked in the last year). Then you need to send out copies of the leave policy and inform the employees that from 2013 they will be allowed 16 days of leave for a full year of work in the previous year, and any leave above that will be without pay. Forget previous years. It will only complicate things.

Most of your employees will not complain that they are now given documented leave. If someone comes to you with a complaint of unfairness, resolve it fairly with the approval of your directors.

You have mentioned that your company is registered under the Shops & Establishments Act, which provides one PL day for every 15 days worked. EL or PL are normally calculated on a year-to-year basis. Company policies are always made effective from a prospective date and not from retrospective dates. Any policy made from a retrospective date is likely to create discrimination among employees during its implementation or application; thus, it should always be avoided. HR policies framed for employees should be displayed conspicuously or given wide circulation so that all employees are aware of them.

Regards,
BS Kalsi
Member since Aug 2011

Dear all,

Calculation of Earned Leave (EL)

What is the actual calculation for EL? Can we deduct weekly offs, public holidays, and leaves from calendar days, i.e., 365 - 62 (52 Sundays + 10 public holidays + self leaves to be taken) = 303 / 15 = 20 EL? Or is there another method?

Thanks.

Regards

All kinds of authorized leaves or leaves with wages availed by an employee in the previous year shall be considered as having actually worked under an employer for the purpose of calculating Earned Leave (EL). The following kinds of eventualities shall also be considered as having actually worked for the purpose of calculation of EL:

(i) All kinds of laid-off periods under an agreement or permitted under the standing orders of the company,

(ii) Absence due to temporary disablement caused by an accident arising out of and in the course of one's employment,

(iii) Maternity leave availed by a female for a period allowed under a statute,

(iv) Any cessation of work for any reasons not due to the fault of workers.

Regards,
BS Kalsi
Member since Aug 2011

I accept the suggestion of Saswatha. Release an Office order/Leave Policy for PL, Maternity Leave, and Family Planning Leave duly signed by the CMD/MD and circulate the same to all employees. Whatever policy you frame will be applicable from the date of its introduction, and nothing should be made retrospective in effect. As you said, there was no HR earlier, and no one has made entries of leaves availed by employees for the last three years. Those who have completed three years, however, will become eligible for Gratuity.

As you are now introducing HR-related issues, please go ahead with creating personal files and sit with respective HODs to evaluate each employee's Job Description, and then find out Training requirements to enhance the capabilities of employees. Prepare an organization chart.

Leave Calculation in Andhra Pradesh and Karnataka

In general (in AP), the calculation of leaves would be 1 day PL for 20 worked days, meaning a person must have worked 240 days in the previous year to be eligible for getting PL for the following year. The period for this would be Jan to Dec. For staff who could not do so, you may have to add Leaves availed during the year to make them eligible for getting leaves. However, the total days would be 12 days as per statutes. Now, as per Karnataka, you mentioned 1 day for every 15 worked days. Please look at the attendance/muster register and prepare an excel statement month-wise/column-wise to arrive at the total worked days during the last year.

For any advice/assistance, please email me at [Email Removed For Privacy Reasons] / [Phone Number Removed For Privacy Reasons].

All the best.

Regards,
S. Rao
Hyderabad