How to Design a Balanced Leave Policy for a Startup with Limited Paid Leaves?

Designing a Leave Policy for a Start-up IT Company

I have just joined a new IT company which is in its start-up phase. I need to design a leave policy. Our parent company offers 24 paid leaves in a year, but they do not distinguish between Casual Leave (CL), Sick Leave (SL), and Earned Leave (EL), as they do not have any HR policy there. Now, in my new company, they want me to design a leave policy, but they will only provide 24 leaves in a year. How should I design CL, SL, and EL for that? Kindly help.

Thanks & Regards,
Priya
Sr. HR Executive

As per the Shops & Commercial Establishment Act, all companies should provide 1 EL for every 20 days worked. Based on this statement, all employees might receive 14-16 EL per annum, depending on the number of days worked per week. The remaining days can be utilized as SL.

Regards

You can design a leave policy as follows:
- 6 Sick Leave
- 6 Casual Leave
- 12 Earned Leave

In most companies, earned leaves are more because they are encashable.

Thanks

As per the Shops and Establishment Act, all companies should provide 1 earned leave for every 20 days worked. Based on the above statement, all employees might get 14-16 earned leaves per annum, depending on the number of days worked. You can design a leave policy as follows:

- 5 Sick Leave
- 5 Casual Leave
- 14 Earned Leave

Best Regards,
Rajeev Ranjan Shrivastava
DS Hotels & Resorts (India) Ltd.

I think you should go with:

6 - Sick Leave/SL
6 - Casual Leave/CL
12 - Earned Leave/EL

As often, companies follow the same leave policy, and I think there's nothing wrong with this.

Hope this will be of some help to design your leave policy:

Sick Leave (SL)

Staff is entitled to sick leave up to XX working days per year for his/her sickness. The leave year will coincide with the fiscal year, i.e., April to March. Sick leave balances may be carried forward to the next year and accumulated up to a maximum of XX days. However, for accumulated sick leaves to be used for long-term illness, a medical certificate or hospital discharge summary needs to be submitted. Unused sick leave beyond XX days shall be forfeited. Sick leave cannot be encashed. Sick leave beyond three days must be supported by a doctor's certificate to be submitted to the HR Department on the day of the employee's return to the office.

Annual Leave (AL)

All regular staff will be entitled to XX working days of annual leave during the leave year, which coincides with the fiscal year, i.e., April to March. Staff members are encouraged to avail their annual leave in a planned manner unless specifically requested by the Supervisor not to take leave in order to cope with the exigencies of his/her duties. Staff members are encouraged to apply for annual leave, for more than 3 days, at least fifteen days in advance by submitting an annual leave application first for approval by his/her supervisor and then to the HR Department. Staff members will be allowed to carry forward a maximum of XX days of annual leave each fiscal year and accumulate a maximum of up to XX days. Unused annual leaves beyond XX days shall be forfeited. Upon ending employment, staff may encash a maximum of XX days of unused annual leaves, which shall be calculated at the rate of the last month's salary drawn divided by 26 working days.

Casual Leave (CL)

Every employee is entitled to XX days of Casual Leave during the fiscal year. Casual leave, if not availed, will lapse at the end of every fiscal year. Casual leave may be refused in case of exceptional pressure of work necessarily requiring the employee's presence. Ordinarily, prior permission of the Supervisor for casual leave shall be obtained by the employee, but when this is not possible, the employee shall inform in writing as soon as practicable for the grant of such leave. However, leave shall not be refused where it has been asked for on account of an accident causing physical injury to the employee, death in the family, or sickness of the employee or his dependents.

Leave policy should be defined as per applicable rules; it can be the Shops & Establishments Act or the Factories Act. It depends on your office registration whether it's under the S&E Act or the Factories Act. Additionally, every state has its own leave rules. You have to define your leave policy based on the locations/states instead of having a standard leave entitlement for all employees working in the company across different locations.

Moreover, you have to maintain a leave with wages register for all locations.

Regards,
Umesh Agarwal