As Per Law How Many EL Can Be Carried Forward And For How Many Years?

Hi, I have recently joined a company as an HR Executive and have a doubt regarding Earned Leaves. One employee joined on 05.11.2015. After completing the probation period of 6 months, he is now a confirmed employee. In our company, 1 EL is credited after 20 working days. Can anyone please tell me the eligibility criteria to avail EL? Is the employee eligible to avail EL credited in the year 2016 in the same year itself, or can he avail it in the subsequent year? Secondly, as per the law, how many EL can be carried forward and for how many years?

Regards,
Shreya

Hello Shreya,

The general norm is that the earned leaves can be accumulated to a maximum of 30 days. Some of the best practices are as follows: The EL's should be calculated even during the probation period, the only difference being that it cannot be taken during the probation period and will get accumulated during that period. You can look at crediting 1.75 EL's per month at the end of every month, and for December alone, the credit can happen at the beginning or the mid of the month (21 days/year). When the employee leaves the organization, the balance of EL's can be paid off based on the last drawn basic. The law in general states the below: Entitlement - On working 240 days in a year. On joining mid-year, he/she will be entitled to 2/3rd of the remaining period during the year.

Hope this helps.

Regards,
Saif

Ms. Shreya,

I don't know if you are aware that while Financial Audit is done, an amount is provided as "Liability" to the Company, which is called "Actuarial Value of Accumulated Leave." It is mandatory to consider the figure in the "Balance Sheet," as otherwise, it would not be possible to pay an Employee for "unavailed Privilege Leave" at the time of Retirement/Termination of Services. It is essential thus to limit the accumulation of Privilege Leave to limit liability. Since there is no legality attached, it depends on the "Service Rules" of the Company, and normally, employees are allowed to accumulate leave up to 60/90 days (considering entitlement of 30 days PA).

Regards,

Hello Shreya,

EL/CL/SL authorization is to be calculated as per the Factories Act/ Shop and Establishment Act. An organization may give more than what is prescribed but cannot give less than what is spelled out in the relevant Act. Accumulation of EL is also prescribed in the relevant Acts - Factories Act/ Shop and Establishment Act.

Hope this helps.

Best Wishes,

Col. Suresh Rathi

Shreya,

Please note that:

1) Earned leave is "earned" even during the probation period.
2) The calculation procedure of earning 1 EL after 20 working days is correct.
3) The leaves earned during a calendar year can be availed in the succeeding year.
4) There is no entitlement to earned leave if the working days in a calendar year are less than 240 days or 2/3rd in other cases.
5) EL earned can be availed in the succeeding year up to three times by submitting an application at least 15 days in advance for a minimum duration of three days.
6) The maximum accumulation of carry forward EL is 30 days or as provided in the certified standing orders.

Hope all your queries are addressed.

P K Sharma

Calculation of earned leave (EL) varies - say as per the Delhi Shop and Establishment Act, it is 5 days of EL for 4 months of service provided the employee has worked at least 60 days physically. Whereas, as per the Factories Act, it is 1 EL for 20 days but credited after 240 days. Therefore, there is no thumb rule, and it varies as per the applicable Act.

Suresh Rathi

Hi Shreya,

First, you need to tell us what your organization is, whether it's a factory, office, or a service-based establishment, and where it is located. The leave rules vary in each state, so you need to refer to the leave rules under the Factory Act or the Shop and Establishment Act (which varies statewise). Additionally, if you have more than 50 employees, you need to consider the additional rules in Model/Certified Standing Orders.

The ratio of one leave for every 20 days generally applies to factories, and if you have worked for part of the year, the provisions are different. The provisions of leave apply even for the period when the employee was on probation, though mostly, they can't use leave during probation. However, leave earned during the probation period can be utilized in the following year.

I hope this information clarifies the leave rules for you. Let me know if you need further assistance or clarification.