Is My Company's Year-End Leave Policy Legal? Seeking Advice on Compliance and Next Steps

I work for a company where leaves are credited only on 31st December of each year on a pro-rata basis. As I am a new joiner, I don't have any leaves. At the same time, the company promises to comply with all local labor laws. I work in Pune.

Guidance Needed on Leave Policy Compliance

Can you please guide me on:

1. By rule, can any company enforce its leave policy on employees?
2. Is this a violation of labor law?
3. If I want justice, whom can I approach?

Regards

I work for a company where leaves are credited only on 31st December of each year on a pro-rata basis. As I am a new joiner, I don't have any leaves. At the same time, the company promises to comply with all local labor laws. I work in Pune.

Guidance Needed on Leave Policy and Compliance

Can you please guide me on:

1. By rule, can any company force its leave policy on employees?
2. Is this a violation of labor law?
3. If I want justice, whom can I approach?

Thank you.

Best regards,
Sanjay Nagare

I work in a Pvt Ltd company with a staff strength of over 200 employees. The company follows a leave policy of crediting leave only on the 31st of December each year. I want to avail myself of the leaves, but I am unable to do so due to the company policy, which results in a loss of pay. I have read that under the Labour Act, after confirmation, employees are eligible for earned leave (EL). Is this information correct?

Sir, could you also provide guidance on my previous questions?

Thank you for your reply.

Leave Policy Overview

Leave is a privilege extended by the Company to its employees, not a right. It is at the Company's discretion to grant leave to all applicant staff members, considering the business needs and the needs of the employees at that time.

Privilege Leave/Earned Leave

For every twenty worked days, one day of earned leave is credited. Generally, it is 15 days per year. (For factories, for every fifteen worked days, one day of earned leave is credited.)

Dear Sirs/Madams,

I work for a company in which leaves are credited only on 31st December of each year on a pro-rata basis. As I am a new joiner, I don't have any leaves. At the same time, the company promises to follow compliance with all local labor laws. I work in Pune.

Can you please guide me on:

1) By rule, can any company force their leave policy on employees?
2) Is this a violation of labor law?
3) If I seek justice, whom can I approach?

Response to Queries

1. A company can have its leave policy within the framework of the law. Crediting leave on the 31st of December is actually as per the law, and there is no deviation from any law.

2. There is no violation of the law here.

3. Since there is no violation, you may not have a case. If you still want to lodge a complaint, you can do so by writing to the Inspector of Factories if you work in a factory or to the Labor Inspector if you work in any other establishment.

Regards,

Leave Policy During Probation and Confirmation

After confirmation, an employee can avail of all leaves. However, during probation, the employee can avail of SL/CL on a pro-rata basis.

Understanding Leave Policies Under Different Acts

The above-stated PL quota, as mentioned by our friend Abedeen7, for every 20 days, 1 day leave, is under the Tamil Nadu Shops Act. The eligibility for PL differs from state to state.

I understand your company is based in Pune and is likely to be registered under the Bombay Shops & Establishment Act. If your company is registered under the Bombay Shops & Establishment Act, Section 35 (Leave rules) states that five leaves for 60 days of work are allowed (can be availed only after 90 days of work), and twenty-one leaves are allowed once you complete 240 days of work (8 months) during the year.

Understanding Leave Entitlement Under The Factories Act 1948

Your case falls under the purview of The Factories Act 1948. As per Section 79 of the act, it deals with "Annual Leave With Wages." You are entitled to 1 leave for every 20 days of working and are entitled to credit/enjoy them once you have completed 240 days with your employer. The year, as defined in the act, starts from January and ends in December, so there is no violation in crediting the leaves on December 31st. However, in the case of employees who joined at a time other than the start of the year, they are entitled to receive credit for the leaves if they have worked 1/3rd of their total working days during the year.

Grievance Redressal Authority

The authority that a person can contact for their grievances is the "Director - Industrial Safety & Health" or the "Assistant Labour Commissioner."

Leave Entitlement and Company Policy

Leave is credited to an employee as per the provisions of the Factories Act or the Standing Order applicable to your company. Leave is credited after one year, subject to working 240 days in that calendar year. Different rules are framed by the company for trainees and probationers. You cannot claim leave as a matter of right. You can avail of leave that you have earned after a year, subject to the exigencies of work.

Thank you, sirs, for your valuable feedback on my concern. To be more clear: I joined on 8th October 2012, and I have completed 10 months already, confirming my employment status. So, my question now is: Am I eligible for leaves (EL) as per the Factory Act 1948? Or do I still have to wait to complete 240 days in this calendar year 2013? Or will I only be eligible after completing my first year?

Your answer will be very helpful to me.

Thanks in advance,

Sanjay Nagare

Understanding Earned Leaves

Earned leaves are leaves that an employee earns only after working for 240 days. Hence, you can avail of earned leaves after working for 240 days, which is equivalent to approximately 11 months. In your case, you can avail of EL/PL in September 2013 as per the rules. To understand your company's leave structure, you can ask your HR to provide you with the leave policy.

Warm Regards,
Neetu

Eligibility for Leave Under the Factories Act

Thank you, sirs, for your valuable feedback on my concern. To be more clear: I joined on 8th October 2012. I have already completed 10 months and am a confirmed employee. So, my question now is: Am I eligible for leaves (EL) as per the Factory Act 1948? Or do I still have to wait to complete 240 days in this calendar year 2013? Or will I only be eligible after the completion of my 1 year?

Your answer will be very helpful to me. Thanks in advance, Sanjay Nagare

Under the Factories Act: "A worker whose service commences otherwise than on the first day of January shall be entitled to leave, with wages at the rate laid down above if he has worked for two-thirds of the total number of days in the remainder of the calendar year."

You have joined on October 8th, and you would have worked for 59 days in these three months. Hence, you are eligible for 3 days of Earned leave, which should have been credited to your leave account on 1st January 2013.

Since you have worked for more than 2/3rds of the remaining calendar year, you are entitled to avail of this leave after 1st January 2013.

However, some companies have Standing Orders certified differently. If the SO says that an employee is eligible to avail leave only after one year from the date of joining or only after confirmation, then such orders are applicable.

Many organizations, even without a clause in SO, have the practice of sanctioning leave only after completion of one year. This practice is not legally correct.

To sum up:

1. 3 days earned leave should have been credited to your account on 1st January 2013.

2. You are eligible to avail these three days of leave during the year 2014.

3. If the Standing Orders have a different rule for sanctioning leave after completion of one year, then the same will be applicable.

4. The Factories Act does not provide for Casual leave or Sick Leave.

Abhay Bandekar has given the correct answer as per the Bombay Shops & Establishment Act, 1961, whereas the IR Manager has provided the correct position as per the Factories Act, 1948. From your query, it cannot be determined if the Shops & Establishment Act (S&E) or the Factories Act (FA) is applicable. Therefore, follow the relevant one—if manufacturing activity is conducted, then the FA is applicable; otherwise, the S&E Act applies.

Having joined in Oct '12, your leave will be credited on 1-1-14. Until then, you can request leave for genuine reasons, and the company has the discretion to grant you advance leave.

I'm working in an MNC company that provides us with Saturdays and Sundays off. With 4 Sundays and 5 Saturdays off, we count 22 working days. 240/11 = 22 days, so I have mentioned 11 months. Every company follows a policy, but the processes are different.

Understanding Company Leave Policies

Hence, I request Mr. Sanjay Nagare to please go through your company's leave policy. This will help you understand your company's processes and policies.

Regards,

Thank you, Nitu Mam and Abhay Bandekar Sir, I work in the manufacturing industry. I have already availed the leaves I received on 31 Dec 2012 (7 leaves) this year (2013). Currently, I do not have any leaves left. The genuine reason for taking time off is turning into a loss of pay, which concerns me deeply.

Eligibility for Leaves

I have earned leaves for 7 months already but have been unable to avail of them due to my company's policy, which states that leaves are credited every year on the 31st of December. Now, my question to all of you is: am I really eligible for leaves?

If yes, then which supporting document (Act) can I show to my HR according to the rules? This will help me convince them. If I am not eligible, I will stop pursuing this further.

My sole intention is that the company should not take advantage simply because we, as employees, are unaware of the relevant acts and labor laws.

If my company's policy is in line with the relevant acts and labor laws, I have no issues. However, if it is not compliant, I need supporting documents to challenge it.

Note: I am a confirmed employee, Lead Engineer, working in the Auto industry (6 days a week) in Hinjewadi, Pune, Maharashtra (from 08 Oct 2012 until now).

Your valuable knowledge will greatly assist me.

Thanks once again.

Thank you, Nitu Mam and Abhay Bandekar Sir, I work in the manufacturing industry. I already availed the leaves I received on 31 Dec 2012 (7 leaves) this year (2013). Currently, I don't have any leaves. The genuine reason for taking time off is resulting in a loss of pay, which is my real concern. I have earned leaves for 7 months, but I couldn't avail of them due to my company's policy, which states that leaves get credited every year on 31st of Dec.

Eligibility for Leaves

Now, my question to all of you is, am I really eligible for leaves? If yes, then which supporting document (Act) can I show to my HR as per the rule to convince them? If I am not eligible, then I will stop here straight away. My only intention is that the company should not take advantage just because we employees are not aware of the Act and labor laws. If my company's policy is within the Act and labor laws, I don't have any problem. If it is not within the Act and labor laws, I need supporting documents to fight.

Note: I am a confirmed employee, Lead Engineer, working in the Auto industry (6 days a week), in Hinjewadi Pune, Maharashtra, from 08 Oct 2012, until now. Your valuable knowledge will help me a lot. Thanks once again.

The company is following the correct procedure where leave will be credited only on the 1st of January every year. You can avail of leave credited to your account only. This is the legal position and is being correctly followed by your company.