Can Employees Use Leave During Notice Period? Understanding Policies and Legalities

I have a doubt regarding employee leave policy. Can an employee take leave during the notice period?

For example, let's consider X, an employee of an organization who resigns. At the time of resignation, he has a balance of 14 unpaid leaves. Now, he is serving the notice period. If he takes leave during the notice period, should we deduct from his leave balance or deduct from his salary? Is there any law governing this, or does it depend solely on company policy?

Can an employee take leave during the notice period?

The subject of whether an employee can avail of leave during the notice period is one that comes up for discussion time and again. Please note that an employee is perfectly eligible to take leave during the notice period. The notice period is a buffer period created for the organization's convenience. This buffer period gives legroom for the organization to search for a replacement. There is no need to link employee leave and this buffer period as both are independent.

Eligibility criteria for employee leave

Eligibility criteria for employee leave are under the provisions of the various labor laws. However, no law states that it should be linked to the notice period.

Thanks,

Dinesh Divekar

Agreed with your point. However, if the employee is on leave during his notice period, what is the benefit of the notice period for the organization? If he is not present at work, what is the purpose of the buffer period? Work will be hampered until his replacement joins.

If regular work is hampered because an employee is on authorized leave, then it will be affected regardless of whether the employee is in the notice period or not! How can you have a situation where work is not affected if the employee is not in the notice period, and it starts being affected as soon as the employee enters the notice period?

From both of your posts, it appears that you are facing a manpower crisis. If this is the case, then you need to review the criteria on which you based your manpower planning. The parameters of manpower planning should include employees' authorized leave, sickness, official visits to outstations, unauthorized absences, and most importantly, the time gap between when the resigning employee exits and the newcomer is yet to join. If you have not accounted for standby manpower, then it is the fault of the administration, and employees cannot be held responsible for this!

Thanks,
Dinesh Divekar

Objective of a Notice Clause in Employment Contracts

The objective of a notice clause in the contract of employment before its unilateral termination by one party is to give the other party sufficient time to make alternative arrangements. It does not restrict the employee's or employer's benefits or obligations, whether they are statutory or otherwise, flowing out of the contract. For example, leave and annual increment—leave can be statutory or by contract. Just because an employee is in the notice period due to his prospective resignation on a future date or his retrenchment effective from a future date, he cannot be forbidden from his leave benefits during that phase. The employer should sanction the leave applied for or can reject it on the grounds of work expediency but should permit encashment in the F&F Settlement but cannot deny both. Similarly, if the annual increment, either as per the contract of employment or under the collective bargaining agreement, falls due during the notice period of the employee, it should be sanctioned.

Disruption of Work During Notice Period

Coming to your argument of the disruption of work, the inability of the employer to find a suitable replacement within the notice period or the non-availability of alternative employment to the employee cannot be an impediment in the smooth flow of the agreed notice period. If you realize that the notice period is a phase in employment facilitating a happy and peaceful separation, it is an ideal HR practice.

The view expressed by my learned colleagues is in favor of granting leave during the notice period. First of all, there is no law that requires granting or refusing leave during the notice period. It is entirely left to the company to make a policy as to grant, prohibit, or adjust leave against the balance and preferably incorporate it in the appointment letter.

I am in favor of not allowing leave during the notice period to enable the resigning employee to finish important tasks before leaving and to clear the desk for the next incumbent. Another reason is to curb, if not entirely eliminate, the tendency on the part of the departing employee to become loose and relaxed but to make them feel more responsible during the notice period. The purpose of the notice period by either side is to allow time to finish all tasks by the employee as well as to find a replacement by the employer as soon as possible. However, granting leave during the notice period and the clause in many appointment letters providing for paying salary in lieu of notice by either side run contrary to the very purpose of the notice period.

Regards, Vinayak Nagarkar
HR Consultant

In our country, leave is mandated by law. The company must comply with how many numbers of leaves will be given to the employee. Approval of leave depends on the company's policy and procedure. The company has the right to disapprove the application of leave due to operational needs. If the employee finishes their grace period, the total balance of leave will be included in the computation of their final pay. Note: If the employee does not comply, you can mark it as NOT CLEARED.

Can an employee take leave during the notice period?

The answer to this question is both "YES" and "NO." It depends on the situation and mutual understanding. If the employee takes leave at their own discretion, it may be subject to action. However, if the leave is sanctioned, then the authority who approved it should be held accountable. If your intention is for the employee to work until the end of the notice period, especially until a new person takes over, then why was leave sanctioned after the employee submitted their resignation?

Do you have any policy or system in place to address this? There is no point in raising the question if there is no guiding policy in your establishment to handle such situations. Your question is justified because the "notice period" system is designed to allow both parties to make further arrangements.

Understanding leave during the notice period

The leave being availed is earned leave by the employee, which must be paid by the employer if not taken during the employee's tenure of service. I hope all queries related to this topic are thoroughly discussed to understand where the lapse might be.

Dear Sandeep, after getting insights from the seniors, you might have found an answer to your query. However, I am still trying to understand how a person can have a leave balance with unpaid leaves included.

Notice period and leave policy

When discussing the notice period, I am not sure what is specified in your company's leave policy. However, if the employee is attempting to exit properly and is serving the notice period, they should be allowed to take leave upon request, considering the legitimacy of the reason behind the leave.

Please note that "no leave during the notice period" doesn't mean "you live or die, I don't care; you have to come to the office as you are on the notice period."

Dear Sandeep, I think the matter can be simplified by looking at each aspect separately and objectively, as below:

1. Legality of Notice Period Clause

When an employer inserts a clause regarding the notice period in the terms of employment, is it a legally valid provision? Yes. There is no law preventing an employer from imposing a reasonable timeframe within which the employee should complete unfinished responsibilities, hand over charge to his/her successor, and then proceed to get relieved.

2. Provision for Leave During Notice Period

To avoid confusion as to whether leave taken during the notice period can be counted as part of the 'notice period' also or not, it is better to make a provision in the terms of employment requiring the employee to BE PRESENT ON DUTY for a certain number of working days to complete the notice period. Depending on how important the position is, the notice period (of active and on-the-job availability) could be determined. Say, 25 days or more, as per the requirement.

3. Avoiding System Mockery

By doing this, the mockery of the system will be avoided wherein an employee who is supposed to give one month's notice does so but also proceeds on one month's leave at the same time. So practically, he becomes unavailable to discharge the duties envisaged while making provision of one month's notice period. Then HR starts wondering whether the actual period of absence (during the notice period) can be counted as notice period as well as leave. Once the requirement of the notice period is defined in terms of physical presence on duty to discharge the work, the confusion on whether to allow leave during the notice period or not will stand answered. If leave is taken, the notice period would automatically stand extended.

I hope this answers your query. By the way, when you say 'leave (unpaid),' what do you mean? Do you mean that it would be without pay? Or that the leave is in balance and it has not been paid for, i.e., not encashed? Probably it is the latter.

Regards, Ravindra Pandit