Should We Offer Two Compensatory Days for Working on a National Holiday? Seeking Clarity

Few employees worked on NFH day (Aug-15), so our team provided 1 Compensatory Off for those who worked on the 15th of August. However, the auditor is now saying that if employees have worked on any NFH day, we should provide 2 Compensatory Offs. Should we provide 2 Compensatory Offs or not? Kindly clarify, sir.

Dear Madam,

Please refer to the Karnataka Shops and Establishment Act/Rules. Generally, it is provided that if the employee is required to work on the four National holidays - 26th Jan, 1st May, 15th Aug, and 2nd Oct - then the employee has to be paid twice his salary and given one compensatory day off.

Regards,
Vinayak Nagarkar
HR Consultant

Sorry to differ from the view of the poster's auditor and that of Mr. Vinayak. For the sake of ready reference, let me present below an extract of sec. 5 of the Karnataka Industrial Establishments (National and Festival Holidays) Act, 1963:

Wages under the Karnataka Industrial Establishments Act

"5. Wages. - (1) Notwithstanding any contract to the contrary, every employee shall be paid wages for each of the holidays allowed to him under section 3 or 3-A. (2) Where an employee works on any holiday allowed under section 3 or 3-A, he shall, at his option, be entitled to - (a) twice the wages; or (b) wages for such day and to avail himself of a substituted holiday with wages on any other day."

Analysis of the Provisions

If we carefully analyze the provisions of the above section, we can deduce the following: (1) The holidays mentioned are paid holidays. (2) The employee may work on any of such holidays. (3) In such a situation, he can have any one of the two options, namely for (a) twice the wages or wages for that day coupled with a substituted holiday with wages on any other day. In other words, he can exercise the option of getting additional wages for that day along with his normal wages or avail a substituted holiday with wages on any other day.

Conclusion

In effect, (1) IF HE AVAILS THE HOLIDAY, he will get his normal wages. (2) IF HE WORKS ON SUCH A HOLIDAY, he will get his normal wages plus the additional wages. (3) He will get his normal wages plus a paid holiday on any other day. Therefore, no question of paying twice the wages when a compensatory holiday is to be availed of by the employee.

I'm completely in favor of your proposal for auditors, as the payment for employees working on a national holiday should be triple the regular wages. If you are currently following the practice of providing compensatory time off and double payment for the day, you must ensure that all employees utilize their entitled compensatory time off to meet the requirement. Additionally, if an employee leaves the organization without taking their entitled compensatory time off, you should compensate them with the appropriate salary for that period (day) as well.

Hi Vasant,
Please note that each state has different rules for National & Festival Holidays. For Karnataka, kindly refer to Mr. Umakanthan's post. It mentions 1 compensatory off or double the wages for that worked day.

Feel free to call or revert for any assistance.

Good morning, if the employee works on a National Festival Holiday, we provide double wages. They earn double the regular wage in addition to the NFH wages for that day, totaling triple wages for the day. How can I deduct ESI and PF for that employee? Please, can anybody guide me on this?