Understanding Leave Wages: When Should They Be Paid According to Labor Laws?

21 days of leave wages are required to be paid to employees in a year. Is there a time limit by which the leave wages of the previous year should be paid to employees as per the Wages/Factory Act or rules? Please also clarify whether leave wages are to be paid according to the calendar year or the financial year.

Leave wages are calculated as per the calendar year and the Factory Act, which specifies working 240 days for every employee. You are required to grant 1 leave for every 20 days worked, resulting in a total of 13 leaves. Additional leaves such as CL/SL depend on the company's policy. Accumulation of leave is permitted up to 40 days; exceeding this limit will result in the loss of accumulated leave. Please correct me if there are any mistakes.

Our learned member, Suchita, elaborated on the act. However, one small correction: leave accumulated for more than 30 days shall lapse.

Dear Friend,

Leave encashment is entirely at the discretion of the employer; they can choose whether to provide it or not. There are no specific provisions regarding this in labor laws.

Regarding the query posted by [QUOTE=sdhaka1985;2232176], 21 days of leave wages must be paid to employees annually. It is important to determine if there is a time limit within which the leave wages from the previous year must be paid to employees, as per the wages/factory act or rules. Additionally, clarification is needed on whether the leave wages should be paid based on the calendar year or the financial year.

Best regards

The leave applicability differs from state to state, governed by the respective Shop and Establishment Act. It is not uniform. Neither can companies decide on a lesser number of days.

Sir,

What are the Leave (i.e., CL, SL, PL) taken by the employee for the calendar year, and also which leave carries forward to the next year? Kindly provide all the details. It is very urgent.

Regards,
K. Sivakumar

Annual leave with wages differs from state to state and Act to Act. For example, under the Shops Act in Maharashtra, 21 days of leave for every year (if worked for 240+ days) is mentioned. Under the Factories Act, 1 day of leave for every 20 days worked is prescribed. One will be eligible for this leave if 240+ days are worked in that year.

Please specify your state and type of establishment to guide you correctly.

Shrikant
Email: shrikant_pra@yahoo.com

Under the Factories Act, it is mandatory to pay leave wages before the employee proceeds on leave. Refer to your state's Shops Act for leave provisions. In Maharashtra, under the Shops Act, leave wages are payable only at the time of the employee's separation.

Leave with Wages: Calendar Year Calculation

Leave with wages should be paid to employees at the beginning of the subsequent calendar year. This means that leave with wages is to be calculated for the calendar year and not the financial year. According to the Factories Act, leave with wages can be accumulated up to 30 days as of the first of January. If it exceeds 30 days, the number of days beyond 30 will be forfeited.

Leave Encashment System

In some companies, a leave encashment system has been introduced to motivate employees. There is no hard and fast rule on leave encashment in industries.

Regards,
Raju

Raju,

You are wrong; leave wages are not to be paid (unless in a factory). Leave is given for employees to enjoy. It is a different matter that employers pay off leave wages, especially to contract workers to save. If an employee is actually given leave, the employer would pay his share of PF & ESI contributions on wages for leave enjoyed. When leave wages are paid, these contributions are zero for paid leave wages.

Shrikant Prabhudesai