Understanding Annual Leave Under the Factory Act: How Are 240 Days Calculated?

Understanding the Factory Act: Annual Leave with Wages

Please help me in understanding the Factory Act regarding annual leave with wages. The act states: "Every worker who has worked for a period of 240 days or more in a factory during a calendar year shall be allowed leave with wages."

Question 1: Calculation of 240 Days

According to this, does a person need to work for 240 days from January to December? Are weekly offs, holidays, CL, and SL included in this count?

Question 2: Joining Mid-Year and Leave Entitlement

If an employee joins in the month of August and cannot complete 240 days in that calendar year, which calendar year is considered for his 240 days?

The act mentions: "A worker whose service commences otherwise than on the first day of January shall be entitled to leave with wages."

Please provide an example of the above statement.

Thank you,

Dinesh Kumar

Reference to Section 79 of the Factories Act

You have quoted Section 79(1) of the Factories Act. Read the explanation below Section 1 for the answer to your first question. Refer to Section 79(2) for your second question.

Regards,
Varghese Mathew
[Phone Number Removed For Privacy Reasons]
[Phone Number Removed For Privacy Reasons]

Weekly offs and holidays are counted in the criteria consideration of 240 working days. Sick leaves and casual leaves are not counted in the criteria calculation of 240 working days. However, the accumulation of leaves will be done based on actual working days. That is, weekly offs, holidays, or any other leaves will not be considered.

Understanding Section 79(2) of the Factory Act

You have to read 79(2) carefully. It is as follows:

(2) 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 in clause (t) or, as the case may be, clause (ii) of sub-section (1) if he has worked for two-thirds of the total number of days in the remainder of the calendar year.

This means if an employee joins sometime in between the year, then the eligibility criteria will be considered as working 2/3rd of the remaining days. His leave accumulation will be done at 1 day for every 20 days worked.

Regards,
Swarna

Those who are joining in January have to work for 240 days. As you mentioned, X joined in August, so you need to track the number of days worked from August to December. For 5 months, approximately 130 days. Okay, 2/3 of 130 days. If he worked for 97 days, he is eligible for PL/EL. He has to physically work for 240 days (from January to December). This rule applies only to those who are joining in January.

With regards,
V. Subbarao

Weekly offs and holidays are counted in the criteria consideration of 240 working days. Sick leaves and casual leaves are not counted in the criteria calculation of 240 working days. However, the accumulation of leaves will be done based on actual working days. In other words, weekly offs, holidays, or any other leaves will not be considered.

Reference to Section 79(2) of the Factory Act

Regarding your reference to Section 79(2) of the Factory Act, it states: "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 in clause (t) or, as the case may be, clause (ii) of sub-section (1) if he has worked for two-thirds of the total number of days in the remainder of the calendar year."

This means that if an employee joins at any time during the year, the eligibility criteria require them to work two-thirds of the remaining days to be eligible for leave. Leave accumulation will be at the rate of 1 day for every 20 days worked.

Thank you for sharing this information, Swarna.

Best regards,

Swarna

You are rightly said.

Even in the "FORM 16" Leave with Wages Register, all these categories have been mentioned to determine the 240 days. No CL, SL, and Weekly off column has been given in this register to determine the 240 days. If anybody has any reference in this act which can clear that weekly off is included to determine 240 days.

Regards,
Dinesh Kumar

Annual Leave Entitlement as per FA-1948

I am writing to share my thoughts on the section concerning the calculation and entitlement of annual leave as per FA-1948.

Entitlement is at 1 day for every 20 days provided the employee has completed 240 days of attendance in a calendar year.

a) If an employee joins on a day other than January 1st, their required attendance will be two-thirds of the available days in the calendar year.

b) If an employee has been on the payroll for the entire year (from January 1st to December 31st) but falls short of the 240-day attendance requirement, Sundays/Holidays should not be considered. Instead, only paid leaves such as Casual leave, Sick/Medical leave, and annual leave taken by the employee should be added to the actual attendance. Sundays/Holidays should only be counted if the employee has worked on those days. If the total of paid leave and actual attendance equals or exceeds 240 days, then the leave entitlement will be calculated at 1 day for every 20 days of actual attendance, not based on 240 days or more including paid leave.

c) Every employee accrues annual leave for the previous year and can utilize it in the following year, except for those who are retiring in the current calendar year. Retiring employees receive payment for any remaining earned leave or can take it in the last month of their service, in accordance with the company's policies. New employees are entitled to Casual leave and Sick/Medical leave on a pro-rata basis.

If you have further questions, please reply, and I will do my best to address them.

Regards,
AK Jain
HR Personnel

Thank you very much for your example; it is a great help. Suppose an employee joins on 1st January but due to unauthorized absence, he remains absent and could not complete 240 days. He completed only 230 days, including all offs, Sundays, CL, SL, and EL. As the employee could not complete 240 days, what will happen to his EL? Will he get any EL for that year or not?

Regards,
Dinesh Kumar

Understanding the 240-Day Work Requirement

To count 240 days worked, Casual Leave (CL), Sick Leave (SL), weekly holidays, festival holidays, and general holidays will not be taken into account for the 240 days. This calculation is based on actual days of work.

Thank you.

No, he will not be entitled to earned/annual leave for that year in which he has not completed 240 days of attendance, even after the addition of paid leave.

Regards,
AK Jain

Understanding Annual Leave with Wages under the Factories Act of 1948

Please go through the contents under sections 79 and 80, i.e., Annual Leave With Wages under the Factories Act of 1948.

If an employee joins on the first day of the calendar year, i.e., January, he will complete 240 days of work in the calendar year, which ends on December 31st. For every 20 days of work completed, the employee earns 1 day of Earned Leave (EL), which can be availed in the subsequent year. If an employee joins in the middle of the calendar year, i.e., after January, he will complete two-thirds of the total working days in the remaining days of the calendar year.

To compute the 240 days of work, we will consider the actual days worked, excluding weekly offs, leaves, public holidays, etc. The days of a woman employee under maternity leave, temporary disablement of an employee due to an injury arising from work-related accidents, legal strikes, and lockouts not caused by the employee, as well as leaves earned in the previous year (ELs), should all be taken into consideration.

Thanks & Regards,

V R RAO PULIPAKA