Is It Common to Customize Leave Carry Forward Rules in HR Software for Indian Companies?

Hello everyone, I work as an Account Manager at an HRMS company, and I am new to this forum. I have a client X who has raised a concern with me regarding the carry forward of Privilege Leave. I just want an understanding of whether:

1) This concern is a general industry practice followed whenever there is a leave policy change.
2) Is it compliant with the statutory laws in India?
3) If we should build a feature in our product to solve this.

I shall explain this concern with an example for better understanding - Employee Z, suppose had 30 PL balance at the end of the calendar year 2018 - got those leaves as an opening balance for 2019 and the annual allotment for 2019, based on monthly accrual, is 16.5. So by the end of 2019, this employee will have a total privilege leave balance of 46.5 (30 PL carried forward from 2018 + 16.5 PL annual allotment for 2019).

Now, client X has a policy configured in our system that only 10 PL should be carried forward, and the rest should lapse. Ideally, this means that in Employee Z's case - the employee will have only 10 Privilege leaves as an opening balance for 2020, and the rest 36.5 PLs will lapse. But his ask is that none of the 30 leaves that were carried forward from 2018 should lapse; they should remain untouched, only the leaves from the 16.5 PL that were accrued in 2019 will get lapsed. So this employee will basically have 40 PLs as an opening balance for 2020 (30 PL from 2018 + 10 PL from 2019 - 6.5 PL from 2019 = 40 PL opening balance 2020).

Client X has had a leave policy change in 2019 and does not want the leaves of 2018 to be impacted. Now in our software or any software for that matter, there is no differentiation while carry forward that a said amount from a said year should be carried forward, and the leaves that are to be lapsed should lapse from the balance accrued in the other year.

Also, wanted to understand from an industry practice standpoint whether this is a valid ask to have the carry forward process bifurcated as per the financial/calendar year?

Location: Mumbai, India

Tags: leave carried forward, leave laws, leave management system, privilege leaves, leave policy, privilege leave, account manager, Country-India, City-India-Mumbai

Understanding Privilege Leave Carry Forward & Industry Practices in India

✅ Compliance with Statutory Laws and Industry Practices:

- The carry forward of Privilege Leave is commonly practiced in many organizations and is often subject to company policies.
- As per the Factories Act, if an employee is not granted leave, the leave should be carried forward up to a specified limit as per the company policy.
- Employers have the discretion to set limits on the carry forward of leave balances, provided it complies with statutory regulations.

✅ Client X's Concern & Solution Approach:

- Client X's request to retain the carried forward leaves from 2018 while lapsing the leaves accrued in 2019 is reasonable.
- To address this concern effectively, consider enhancing your HRMS software to allow for a bifurcated carry forward process based on the financial/calendar year.
- Implement a feature that distinguishes between leaves carried forward from previous years and newly accrued leaves, ensuring the retention of specific leave balances as requested by the client.

✅ Practical Implementation Steps:

1. Conduct a thorough review of the existing leave policies and compliance requirements in India.
2. Consult with legal experts to ensure that the proposed feature aligns with labor laws and regulations.
3. Develop a customizable feature in your HRMS system that enables the differentiation and retention of specific leave balances as per the client's request.
4. Provide user training on the updated feature to ensure seamless implementation and usage.
5. Regularly monitor and update the feature based on feedback and evolving statutory guidelines.

By addressing Client X's concerns through tailored software enhancements, you can optimize leave management processes and ensure compliance with applicable laws and industry standards.