Challenging Issue For HR Experts

Hi,
So here is the situation for your consideration
1. A company has a policy for leave that every year on 31 March all "entitlement" leave of the employees will lapse.
2.Annual leave is termed as "entitlement" in the rules and regulation of the company, there is no head as earned leave.
3. An employee resigns on 20 March with 10 annual leave still pending at his end.
4. Upon resignation the employee loses all entitled leaves.
5. Employee has to serve 2 months notice period.
As an HR person what should I do?
Option1.
Allow employee to use 10 leaves.
Option2
Do not allow employee to take leave but allow him to encash pending leaves.
Option3
Do not allow employee to take leave and do not allow encashment of leave ( are there any legal repercussions of this? If yes please cite the rules with ref. To Maharashtra state laws)

Question No1 earned leave under factories act does not lapse-it gets carried forward to next year.

Q No2-whether you call it entitlement leave or anything else Factories Act calls it Annual leave with wages.

Q No3 read this extract of Factories Act-- CHAPTER VIII, Annual Leave with Wages .

....

79. Annual leave with wages

[(3) If a worker is discharged or dismissed from service or quits his employment or is superannuated or dies while in service,during the course of the calendar year, he or his heir or nominee, as the case may be,shall be entitled to wages in lieu of the quantum of leave to which he was entitled immediately before the discharge, dismissal, quitting of employment, superannuating or death calculated at the rates specified in sub-section (1),even if he had not worked for the entire period specified i sub- section(1) or sub-section(2) making him eligible to avail of such leave, and such payment shall be made-

Q No4 see above answer

Your options will be governed by Factories act(I presume the establishment is subject to same act)

Apart from Mr. Nathrao's view even if your establishment comes under Shops & Establishment Act, then too the leave has to be carried forwarded to upto a maximum of 3 years equivalent to 63 leaves. Please let us know what your Leave policy states so as to give appropriate view. For more details please refer Bombay Shops and establishment Act

Actually there is no challenge.
Establishments have to follow leave rules as laid down in the Act governing their establishment.-Factories Act or State Shops and Establishment Act.
One can give more leave than stipulated but less will be a violation.Establishments should automatically fall in line and not try to find loopholes in fine print or some court ruling.
Giving adequate leave for employees is one way of developing employee satisfaction level and win employee loyalty.
This two attributes will more than compensate for employee absence due to leave.

Dear .........,
Company policy should be in line with or with extra benefits than the Labour Laws.
You have to provide Annual Leave with Wages as Per Section 79 of Factories Act, 1948.
As per Factories Act, the accumulation limit is 30. You can encash leaves beyond 30.
Regards
Govind Pawar

Hi, The Annual leave in your company if termed as Entitlement Leave then also it can not be subjected to lapse while somebody is leaving it is to be encashed.Encashment of due leave is laid down provision specifically in the FA.
If employee has applied for leave , your company can allow pro-rata leave ie in 2 months notice period, he would have earned 5 days leave - so allow 5 days leave or you can allow more also you think appropriate within your leave rules.
Regds,
RDS Yadav
Labour Law Adviser
Director-Future Instt of Engg and Management

In the context mentioned in the post, a private policy on a particular subject-matter is what an organisation is going to do or refrain from doing it in a particular manner and a Law on the particular subject-matter is what and how every one covered by it should do the same thing. Therefore, no policy of an organisation on any subject-matter can run counter to the legal provisions on the same subject-matter. Whatever be the poster's establishment, the Management should have understood the concept of "Earned Leave" in its right sense not withstanding any other nomenclature conferred on it according to one's whims and fancies. Leave of absence from work or work place or "leave", as it is commonly called, is a reprieve granted to the employee not only to discharge his personal and social obligations but also to get rejuvenated to maintain his efficiency levels. That's why earned leave is computed on the basis of the number of days worked and specifically designed to be availed of in the succeeding year with a facility to accumulate to certain limited extent. If my presumption is right, no Law envisages periodic surrender of earned leave for cash benefit other than in the event of any lawful termination of employment. Cash equivalent of the unavailed portion of earned leave at one's credit is the part and parcel of the employee's terminal benefits. Hence at this juncture choose either option-1 or option-II. However, do not hesitate to bring the fact to the notice of your MANAGEMENT that present leave policy needs to be in tune with the legal provisions applicable to your establishment.

All leaves records and accounting is done in line with calendar year, not in line with financial year, is what I have learnt in the past. Am I right? If yes, even adjustment of all leave as on 31.03 every year is wrong, apart from the fact that the company is cancelling all un-availed leave (which is even more absurd)

Hi All,
Thanks for your oopenions, suggestions and advises. It's really helpful and I can use to for the benefit of employees and organization.
Will it make any difference if the firmm is an office or a factory.
Ours is an IT firm.