New HR at a Small Firm: Can Sick and Casual Leave Be Accrued After Probation?

I recently joined an architecture firm to manage the HR. Since the company is fairly new (2 years since inception), a lot of policy issues are still in progress. The current leave policy states that the sick and casual leave components are accrued even after an employee has finished his/her probation and received permanent employee confirmation. If I am correct, sick and casual leaves cannot be deemed accrued. There is a fixed amount of sick leave (SL) and casual leave (CL) per year per employee. Could anyone clarify this? The firm is new, as I have mentioned, and the employee strength is around 18 currently.

Clarification Needed on Leave Accrual

Can someone please shed some light on this? I feel the owner, who is inexperienced, is handling a lot of policy matters on an ad hoc basis. Thanks in advance.

Regards

Understanding Leave Policies: Casual and Sick Leave

It is not typical for leave policies to allow employees to earn casual leave (CL) and sick leave (SL) based on actual service, as is the case with annual leave or earned leave. These types of leave are usually granted to employees in aggregate, subject to limits such as 12 days of CL and 30 days of SL (as may be prescribed in the leave policy or contract of service) per year. These leaves are admissible even during probation.

However, in the case of sick leave, an employee during probation or in their first year of service may be granted leave on a pro-rata basis since they have not completed one year of service.

Regards,
B. Saikumar

Leave Policy Clarification

Normally, Casual Leaves (CLs) are not carried forward but elapse if not availed in the particular calendar year. Some companies encash the unavailed CLs to the employees.

Sick Leaves (SLs) are carried forward in some companies with a ceiling. Again, it all depends on the company policies.

Regards,
Pon

Thanks SaiKumar and Pon for the replies.

Clarification on Sick Leave Entitlement

SaiKumar, my understanding is similar to what you have commented—that an employee is entitled to SL subject to a maximum limit of 12 after he completes a year. This is true as per the Karnataka Establishment Act as well, I believe. However, I was concerned whether there is any leeway afforded to companies that are relatively new and have employee numbers less than 25. Could you confirm this?

Appreciate your replies.

Thanks

Understanding Leave Entitlements Under the Shop and Establishment Act

Casual leave and sick leave are not covered in the Factories Act. The Shop and Establishment Acts of various states specify entitlements for CL and SL. For example, as per the Shop and Establishment Act of Delhi, 12 CL cum SL are entitled, with not less than 1 day for every completed month, and no accumulation is permitted. This means that unavailed CL cum SL cannot be carried forward to the next year.

These entitlements are mandatory, and in the event that an employer has established rules providing for more than these numbers in Delhi, it is at their discretion, and they are well within their rights to do so.

Regards,
Col. Suresh Rathi

It is not clear as to what you mean regarding any leeway afforded to a new company. As far as my understanding goes, the Shops and Establishment Act is applicable to an establishment from the day it comes into existence, provided it is located in the area to which the Act is applicable or in the area to which the application of the Act is extended by the State Government through notification. The Shops Act does not prescribe any minimum number of persons to be employed for the Act to apply.

Exemptions Under the Karnataka Shops Act

Furthermore, the Karnataka Shops Act deals with exemptions under Section (3). I have not come across any provision exempting a new establishment from being covered. Please review this section.

Leave Policies Under the Act

Regarding sick leave, the Act does not specify that it is linked to actual days of service, unlike annual leave/earned leave. Additionally, Section 15(10) permits the establishment to establish a scheme to regulate various kinds of leave admissible under the Act.

Regards,
B. Saikumar

Mr. Saikumar is absolutely right to state that there is no difference between the entitlement of leave as per any Act/Rule for old/new companies, nor is the number of employees linked to entitlements of leave.

Regards,
Col. Suresh Rathi

A lot of discussion has been made in this thread, which is absolutely valid. However, I think the original question is still not answered. You need to check the rules as they apply to your state. It gives the minimum number of days of leave that are applicable to each employee. The rules generally state that the employee will be eligible to leave after one year of working (or, in some states, on 1st January of the next year). On that day, he gets a set of leave credited to his account, and he can use them as he needs (subject to company policy on usage).

So, to me, it seems that accrual of leave (but not allowed to use it) till January of the next year is valid in light of the S&CE rules that apply to you.