Is Our New Leave Policy Under Tamil Nadu Shops & Establishments Act Fair?

Dear Senior,

We come under the Shops & Establishments Act of Tamil Nadu. Our company was recently taken over by an MNC. However, we continue to follow all Indian statutory requirements.

Under our previous management, we used to allocate 12 days of CL, 12 days of SL, and 12 days of PL for all employees based on their eligibility. Now, the new management has instructed us to reduce the leave entitlements to 10 days of CL, 7 days of SL, and 1 day of PL for every 20 days worked. They justify this by stating that the act specifies "not exceeding 12 days only," and it does not mandate the allocation of 12 days.

Could you please provide clarification? Is the new policy correct?

Thank you,
Devibala

Section 25 of the Tamil Nadu Shops and Establishment Act

Please find below Section 25 of the Tamil Nadu Shops and Establishment Act, which states:

Holidays and Sick Leave

(1) Every person employed in any establishment shall be entitled, after twelve months of continuous service, to holidays with wages for a period of 12 days in the subsequent twelve months, provided that such holidays with wages may be accumulated up to a maximum of twenty-four days.

(2) Every person employed in any establishment shall also be entitled during his first twelve months of continuous service after the commencement of this Act, and during every subsequent twelve months of such service:

(a) to leave with wages for a period not exceeding twelve days, on the grounds of any sickness incurred or accident sustained by him, and

(b) to casual leave with wages for a period not exceeding twelve days on any reasonable ground.

(3) If a person entitled to any holidays under subsection (1) is discharged by his employer before he has been allowed the holidays, or if, having applied for and been refused the holidays, he quits his employment before he has been allowed the holidays, the employer shall pay him the amount payable under this Act in respect of the holidays.

(4) If a person entitled to any leave under subsection (2) is discharged by his employer when he is sick or suffering from the result of an accident, the employer shall pay him the amount payable under this Act in respect of the period of the leave to which he was entitled at the time of his discharge, in addition to the amount, if any, payable to him under subsection (3).

(5) A person employed shall be deemed to have completed a period of twelve months of continuous service within the meaning of this section, notwithstanding any interruption in service during those twelve months brought about by:

(i) sickness, accident, or authorized leave not exceeding 90 days in the aggregate of all three,

(ii) a lockout,

(iii) a strike which is not an illegal strike,

(iv) intermittent periods of involuntary unemployment not exceeding thirty days in the aggregate, and authorized leave shall be deemed not to include any weekly holiday or half-day holiday under this Act which occurs at the beginning or end of an interruption brought about by the leave.

(6) A person employed in a hostel attached to a school or college or in an establishment maintained in a boarding school and lodging of pupils and resident masters shall be allowed the privileges referred to in subsections (1) to (5), reduced proportionately to the period for which he was employed continuously in the previous year or the period for which he will be employed continuously in the current year, as the case may be; all references to periods of holidays or of leave in subsections (1) and (2) shall be construed accordingly, with fractions of less than one day being disregarded.

(7) The Government shall have the power to issue directions as to the manner in which the provisions of subsection (6) shall be carried into effect in all or any class of cases or in any particular case.

Dear Stephen,

Thank you so much for your insight. Could you please inform me directly whether reducing the leave from 12 days to 7 days is permissible or not?

Thanks again for taking the time to reply to me.

Best Regards,
Devi Bala

Dear Devi Bala, I don't know what prompted your new MNC Top Brass to adopt such a stringent interpretation of a beneficial provision based on word games! The phrase "not exceeding 12 days" can also be interpreted as "not less than 12 days" on the principle of constructive interpretation for the simple reason that stress is given in the sub-section only to "the entitlement" of the person employed and not to "the discretion" of the employer. Of course, the employer can exercise his discretion to adopt a higher scale of calculation that would be more beneficial to the persons employed, like in the proposed calculation of PL @ ONE DAY for every 20 days of work that works out to 18 days per year. Even otherwise, 12 days each of SL and CL per year has become a customary right or privilege enjoyed by the employees, and you cannot curb it now.