Leave Policy Dilemmas: How Should Companies Handle Leave Pay and Probation Periods?

Leave Policy Queries

1. If a company does not provide any leave throughout the year to employees and pays the leave salary once a year, is that acceptable? If an employer deducts absenteeism every month, is it mandatory to pay the leave salary?

2. If an employer does not provide leave (other than weekly off and public holidays) to probationers for the first 6 months of joining, are the employees eligible for leave after completing the probation period as leave salary for that period?

3. What is the ideal time for paying leave salary to employees? Is it April, January, or any time of the year?

I do not think it is mandatory for the employer to pay wages for the lapsed leave at the end of the year. However, no employer can restrict any employee from availing of his leave as entitled. The only thing is that the authority to sanction the leave to an employee is vested with the employer. Accordingly, the employer can sanction the applied leave of an employee depending upon the exigencies of work or considering the genuineness of the reason for the leave sought. If an employer decides to pay wages for the lapsed leave, it can be done either in the fourth week of January or in February of every year, as it is being availed by an employee during the calendar year.

Thanks & regards,
V Sridhar

Your Queries:

1. If any company does not provide any leave throughout the year to employees and pays the leave salary once a year, is that okay? If an employer deducts absenteeism every month, is it mandatory to pay the leave salary?

2. If any employer does not provide leave (other than weekly off and public holidays) to probationers for the first 6 months of joining, are the employees eligible for leave after completing the probation period as leave salary for that time?

3. What is the ideal time for paying the leave salary amount to employees? April, January, or any time of the year?

Position:

1. Any employee who has earned (qualified on fulfillment of service conditions) leave and applies as per laid down procedures and in the prescribed forms/format to avail any part of earned and other admissible leave (including holidays) cannot be lawfully denied such availment of leave applied for unless the leave applied for cannot be sanctioned/approved due to exigencies of work. In such events/situations, the leave due and applied for will have to be carried forward strictly in accordance with statutory provisions of either the Factories Act and the rules or the Shops & Establishment Act and the rules or the service rules framed by the government for their employees.

Grant of leave cannot be arbitrary. Further, encashment of unavailed leave due has to be within the statute and income tax laws applicable. Encashment of unavailed leave is also not arbitrary.

2. Probationers are also governed by the above-mentioned acts and rules. In case national holidays fall during the probationary period, the probationer cannot be denied such leave with full wages or a compensatory leave. Probationers are employed against permanent sanctioned posts, and the probationary period, including the extended probationary period, will be accounted for computing leave eligibility.

3. According to past precedents, establishments allow encashment of leave up to the admissible limits in the next calendar year for the preceding calendar year before IT payment dues are calculated, and shortfall adjusted in installments.

Regards,
Kritarth Advisory Team & Management Guide

Kritarth Consulting Pvt. Ltd

Kritarth Consulting Private Limited

Bengaluru, Delhi NCR, Pune, Jamshedpur

October 28, 2014, 1:30 pm