Setting Up Leave Procedures for a Garment MNC in India: Need Your Advice on Casual, Sick, and Earned Leave Allocation

Hi all, can anyone help me set up the leave procedure for a multinational corporation in the garment manufacturing sector based in India? The leave structure should include Casual, Sick, and Earned leave. Currently, we allocate 7 days for Casual leave, 7 days for Sick leave, and 15 days for Earned leave per year, respectively.

Thank you.

Regards.

Dear Colleagues,

Creating a Leave Procedure

The issue of creating a Leave Procedure should actually start with a Leave Roster. This Leave Roster has to be approved by Management with the consent of the Line Managers and, of course, the HR of the Company, taking into consideration the following:

Earned Leave

- Convenient Time Leave Period Sorted By Individual Employee
- Volume of Business/Workload at this time/season
- Availability of Relief Officer for Officer on Leave
- Is Leave Period Convertible to Cash

Casual Leave

- How urgent/important is the casual leave sought
- Confirm purpose - exam, family-related (e.g., burials, weddings, etc.)

Sick Leave

- Most times Doctors' recommendations' duration of stay at home
- Endorsed Sick Leave paper from Medical Practitioner submitted to the HR is vital.

However, there is this aspect of Leave Period available based on Career Status. For instance, while Casual and Sick Leave periods could be 7 days for the year through the rank and file of the Company, I do not think 15 days should be flat for everyone (e.g., CEO, GM, etc.).

I would suggest a staggered period based on seniority and status in the Company. In addition, Leave Period should be encashable if an officer chooses not to go on leave, especially if induced by Company pressure.

Thanks.

Dear Antony,

This is the leave procedure that we follow at our company. Hope it helps you.

LEAVE PROCEDURE

The applicant has to apply for the leave before 7 working days for the CL and PL.

Procedure:

The applicant should apply via mail for the leave.

All details should be there like:

- Date of leave requested and date of joining back
- Valid reason of leave with contact address, if other than what has been given

The leave application should be addressed to the HR in charge with cc to immediate superior.

The supervisor will first look at the leave and assess if the leave is valid or not.

If the supervisor sanctions the leave, then he should forward this mail to the HR.

If the supervisor does not sanction the leave, then he should forward the mail to HR with a valid reason.

HR will inform the applicant of the decision taken.

If superior approves:

The HR will assess the leave, and if he finds it valid and sanctions it after discussions with the Senior.

The senior forwards the mail to the HR in charge, who will inform the applicant.

Approval time would be 3 working days.

In case of Urgent leaves/casual leaves:

Applicant sends a mail in the same way.

A valid reason is required.

Approval or denial will be done.

Regards,

Prerna 😀

Hello all,

Could anyone send me the act that governs leave and holidays that are mandatory for an organization according to the Shops and Commercial Establishment Act?

Regards,
Harikeyel

Dear Antony,

As far as procedure on leave is concerned, it depends upon the philosophy of the organization. Since yours is a manufacturing unit, under the Factories Act, there is only provision for Sick and Earned (Leave With Wages) Leave. Casual Leave falls under the Industrial Establishment Act.

You are free to give any number of leaves, but under the Factories Act, leave with wages is restricted to one leave for every 20 days of working, and further, an individual is required to complete a minimum of 240 days to become entitled to the leave with wages. This leave is encashable, and encashment is exempted from income tax up to an encashment of Rs. 3 lacs. This exemption is applicable at the time of retirement or resignation. Many organizations give more than 15 days of leave to employees under this category and consider this in the employee cost to company.

As far as availment is concerned, under the Factories Act, this leave can be sanctioned for a minimum of 3 days and a maximum of 3 times in a leave year. Again, many organizations sanction earned leave even for one day and on more than occasions.

Sick leave under the Factories Act is applicable to all employees who fall sick during the leave year. There is no number specified for this, but many organizations provide 7, 10, or 15 days of sick leave during the year, even if the employee is covered by the Employees' State Insurance Act and scheme. Under the ESI scheme, in case an employee falls sick due to any disease, the doctor can sanction bed rest for any period until the fitness of the employee. This is also termed as sick leave but may be with or without pay. If the employee is covered under the ESI scheme and rest has been recommended by the ESI dispensary/hospital doctor, ESI authorities will pay compensation for this loss of salary/wages. This is inapplicable if the employer is not paying any benefits of compensation to the concerned employee.

Casual leave again depends upon the policy of the company. Generally, 7 days of casual leave are granted to every employee to attend/discharge their social responsibilities.

Further, in general, in every industry, a combination of casual leave with other types of leaves is not permissible. I do not find any reason behind that. If restriction or reducing absenteeism is the target, this theory was applicable when most of the workforce was unorganized. The scenario has changed now.

Leave without pay is also another type of leave, which is generally discouraged, but in case of exigencies, this is applicable and helps employers to restrict the misuse of the privilege given by an employer.

Compensatory leave is another type of leave under the Factories Act. Under this, the employee is compensated with leave with wages for their absence from duty against the work performed by them on any other day when normal working was not there. Under the Factories Act, this leave can be availed by the employee any time until their retirement.

In a nutshell, it is the philosophy of the company to provide leave benefits to its employees to keep their morale high.

Regards,

Anil Anand

Dear Anil Ji,

As you have mentioned that provisions regarding sick leave are stated in the Factories Act, I was unable to locate them. Could you please specify the chapter in which the provisions regarding sick leave are mentioned?

Regards,
Vikram Singh
09810102421

Sir,

Your points are crystal clear. I want a little more information. As BPOs come under the Shops and Establishments Act, how is their leave policy going to be changed?

Hello Harikeyel,

For any information you need under the Shops and Commercial Act, you can refer to the same act. It provides details about all the rules applicable to an organization covered under the Shops and Commercial Establishments.

Regards,
Harikeyel

Hello,

The Shop & Establishment Act of the respective state government would apply. When the Shop Act is applicable, other legislations on the subject are silent.

Regards,
KK Nair

Hello friends,

Can all those working in IT companies share how you monitor leaves being taken and recorded as well? How do you validate that a person who is absent on a day also fills in/applies for the leave? What checks are in place? I would appreciate it if you could share. In our current system of filing leave cards, it is difficult to check whether a person who has taken leave has filled in their leave card honestly too.

Regards,
Shailly

Hi all,

Can anybody help me with this matter? In our organization, one employee took a one-month leave for her marriage. Our organization operates only five days per week. During that month, can I consider Saturdays and Sundays as part of her leave or should I treat them as holidays? I have some doubts about this, and I would appreciate clarification from anyone who can help.

Regards,
Lalitha

Hi Lalitha,

As per my understanding, you cannot consider Saturday and Sunday as leaves taken by him. In our company, if any person has taken leaves and that comes between two holidays, we consider that single day as a leave taken by him.

Sweta R C

Hello Lalitha & Sweta!

The precept is that, as regards casual leave, it will be only the actual leave availed. Whereas for annual leave, privilege leave, earned leave, etc., the in-between holidays have to be counted as leave. Mind you, but not the prefix or suffix. Hope this clarifies. 😂

KK Nair

Hi,

Is all the leave encashable or is there any restriction for it? Please provide me with the procedure for taking paid leave, casual leave, or sick leave.

Waiting for a reply.

Vivek Seth

Hi, my name is Rajveer, and I want to write an application to my HR asking them to issue me my relieving letter. Can you please send some examples of how one should write an application regarding the same.

Regards,
Rajveer

Hi,

Ours is a software development firm. Should we frame the Leave Policy as per the Shops and Establishments Act?

Regards,
Gunjan

Dear All,

One of my employees has applied for 6 casual leaves, but I found that only 2 casual leaves are left in his account, and sick leave balance is at 6. As per the practice followed earlier, the HR used to adjust the remaining 4 leaves from the sick leave account. Please suggest to me if this is the right approach, or should we ask the employee to change the application form and segregate the leaves into two parts - 2 for casual and 4 for sick. However, I am aware that two different types of leaves cannot be clubbed together.

Regards,
Anueha

Dear Antony,

Please go through this attachment. It will be helpful to you for developing a new leave policy.

With warm regards,
Senthil

How many times can an employee avail earned leave in a year and how many leaves can he take at one go?

If an employee joins on 1st November 2006, when can he avail earned leaves if the earned leaves are 15 in a year?

Dear All,

Please send the HR policy to my personal email ID - nirmalnegi@hotmail.com. I request all of you to provide your valuable suggestions on my following query:

I work for a freight forwarding company. As per our company rule CL-7, SL-7, and EL-26 in a year (i.e., Jan-Dec). SL cannot be carried forward.

If an employee requests leave for 2 days in the month of January and then needs 3 days off again, which are not continuous, can I allocate 2 CL in January and 3 CL in February? If so, then only 1 CL will be left for the next 10 months. Is this right according to the law or according to PF?

Another option: can I adjust his February leave in EL, and please clarify if half EL can be given to any employee or if it is mandatory for EL to be not less than three.

If any holiday falls between four continuous leaves, counted as EL, that holiday will be considered as leave. Please provide me with the supporting article or notification that can help me prove this to my organization.

Your support and soonest reply will be highly appreciated.

With Regards,

Nirmal

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Hi all,

I want to prepare a leave policy for my company. Currently, the management has only provided one leave for 20 working days (1 and a half days' leave per month) and they have not given any sick leave, earned leave, etc., and they are not interested in providing anything in the future either.

So, how should I prepare the leave policy? Are there any statutory requirements to be followed in the leave policy?

Please, could anyone provide information on that?

Regards,
Kavitha

Annual / Privileged / Earned Leave:
1 day for every 20 days of work, i.e., 1.5 days per month, totaling 18 days per annum.

Carry forward: Can be carried forward to a maximum of 30 days to the next year, with the rest lapsing.

Encashment: Unavailed privileged leave can be encashed in the next calendar year but is not stipulated under law.

Sick/Medical Leave:
1 day per month, equal to 12 days of sick leave per annum upon submission of a medical certificate.

Carry forward: Unavailed medical leave will lapse by the end of 31st December.

Encashment: No encashment is allowed.

Casual Leave:
Not applicable for Karnataka as per the law.

Maternity Leave:
A female employee, after being employed by the employer for a period of not less than 80 days, is entitled to 12 weeks of maternity leave - 6 weeks before the expected delivery and 6 weeks post-delivery. An additional one month of leave and benefits are available for women facing pregnancy-related illnesses, delivery issues, premature birth, miscarriage, termination of pregnancy, and tubectomy, provided medical evidence is provided.

Hi,

Thank you for your response. Is there any condition or law that only allows 30 days of leave to be carried forward to the next year? Some of our employees have a leave balance of more than 90 days.

Is sick leave strictly enforced by law, or are there other options available? We do not provide any sick leave facility in our organization. However, women who are covered under the ESI scheme are entitled to sick leave and maternity leave, receiving compensatory amounts from the ESI. Employees not covered by the ESI scheme do not have sick leave provided by the company.

In that case, how should we create a leave policy? Please provide me with a response.

Regards,
Kavitha

Hi Kavitha,

Yes, the law allows you to carry forward a maximum of 30 days. Any unavailed balance above 30 days will lapse. It again depends on the company whether or not to keep a limit on carry forward. You could also encash the leave so that you could carry it forward.

With respect to sick leave for employees under ESI, there is no limit on sick leave. Sick leave of 12 days is applicable to non-ESI employees and should be given as per the law. If you are not giving it, you are violating the law.

Hope this helps.

Regards,
Bharathi

Dear Friends,

Regarding the query about my article on Form member "Leave Procedures," please review it.

Regards,
:D
PBS KUMAR

Hi Bharathi,

Thank you for your reply. You mentioned that 12 days of sick leave should be given as per the law. However, our management is not prepared to accept this criteria. They only provide 1.5 days per month as a privilege leave to all levels of employees. This leave can be carried forward and accumulated without any limitation.

In this scenario, how should I prepare a leave policy? If I include only privilege leave in my document, will it cause any issues? Please shed some light on this matter.

Regards,
Kavitha

Hi Bharathi,

Thank you for your reply. You mentioned that 12 days of sick leave should be given as per the law. However, our management is not ready to accept this criteria. They are only providing 1.5 days per month as privilege leave to all levels of employees. This privilege leave can be carried forward and will keep accumulating without any limitation.

In this scenario, how should I prepare a leave policy? If I only include privilege leave in my document, will it create any problems? Please shed some light on this issue.

Regards,
Kavitha

Dear Sir/Madam,

I am working in a construction company as a personnel manager. Regarding how to maintain the employees' leave records, CL (Casual Leave) is 12 days and PL (Paid Leave) is 15 days.

If an employee takes leave on Saturday and Monday, do we calculate it as 2 days or 3 days?

If Saturday falls on a national holiday and the employee takes leave on Sunday and Monday, how should we calculate this?

Kindly advise me on the correct approach.

Prasanna

Hi All,

I would like to know the procedures for leave approvals in order to establish a system for the same.

Regards,
Neha

Dear Anil Anand,

As far as the procedure on Leave is concerned, it depends upon the philosophy of the organization. Since yours is a manufacturing unit, under the Factories Act, there is only provision for Sick and Earned (Leave With Wages) Leave. Casual Leave falls under the Industrial Establishment Act.

You are free to give any number of leaves, but under the Factories Act, leave with wages is restricted to one leave for every 20 days of working, and further, an individual is required to complete a minimum of 240 days to become entitled to the leave with wages. This leave is encashable, and encashment is exempted from income tax up to an encashment of Rs.3 lakhs. This exemption is applicable at the time of retirement or resignation. Many organizations give more than 15 days of leave to employees under this category and consider this with the employee cost to the company.

Regarding availing leave, under the Factories Act, this leave can be sanctioned for a minimum of 3 days and a maximum of 3 times in a leave year. Again, many organizations sanction earned leave even for one day and on more than occasions.

Sick leave under the Factories Act is applicable to all employees who fall sick during the leave year. There is no number specified for this, but many organizations provide 7, 10, or 15 days of sick leave during the year, even if the employee is covered by the Employee's State Insurance Act and scheme. Under the ESI scheme, in case an employee falls sick due to any disease, the doctor can sanction bed rest for any period until the employee is fit. This is also termed as sick leave but may be with or without pay. If the employee is covered under the ESI scheme and rest has been recommended by the ESI dispensary/hospital doctor, ESI authorities will pay compensation for the loss of salary/wages. This is inapplicable if the employer is not paying any benefits or compensation to the concerned employee.

Casual leave again depends upon the policy of the company. Generally, 7 days of casual leave are granted to every employee to attend/discharge their social responsibilities.

Further, in general, in every industry, a combination of casual leave with other types of leaves is not permissible. I do not find any reason behind that. If the restriction is the target or reducing absenteeism is the target, this theory was applicable when most of the workforce was unorganized. The scenario has changed now.

Leave without pay is also another type of leave, which is generally discouraged, but in case of exigencies, this is applicable and helps employers to restrict the misuse of leave privileges given by an employer.

Compensatory leave is another type of leave under the Factories Act. Under this, the employee is compensated with leave with wages for their absence from duty against the work performed by them on any other day when normal working was not there. Under the Factories Act, this leave can be availed by the employee at any time until his/her retirement.

In a nutshell, it is the philosophy of the company to provide leave benefits to its employees for keeping their morale high.

Regards,
Anil Anand

Dear Anand,

As you have mentioned above, which is underlined by me, that compensatory leave can be availed at any time until his/her retirement. Can you tell me in the factory act where it is mentioned, I mean under which section of which rule? Because I heard that it shall be availed within two months from the date of compensatory leave earned (under the Factory Act).

Manoj Singh

Hi, anyone living in Qatar and working in HR, I'm in urgent need of an "annual leave policy/leave details and procedures" according to Qatari Labor Law, in line with the market situation, industry standards, and place of work. This would be really helpful for me if somebody could look into it.

Thanks.