Understanding Earned Leave Calculation: Is It 15 or 18 Days Under the Factories Act?

Dear All, kindly suggest the method of calculation of earned leave as per the Factories Act, 1948, specifically Section 79. According to Section 79, every worker who has worked in a factory for a period of 240 days or more in a year is entitled to leave with wages in the subsequent year at the rate of one (1) leave for every twenty (20) days of work performed by him during the previous year.

If we consider weekly offs and public holidays, the total earned leave for an adult worker after the completion of one year will be 18 days. However, if we don't consider weekly offs and public holidays, the total accumulation of leaves will be 15. My query is: what is the actual method of calculating the total number of leaves for an adult worker—15 days or 18 days?

Eligibility for Leave

An employee becomes eligible for leave only if they have worked for 240 days in the preceding year (Year means the calendar year, i.e., January to December). These 240 days shall include all paid days, i.e., leave with pay days, holidays, and weekly off days.

If an employee joined during the preceding year, say, July, they shall work for the number of days in proportion to 240 days or 120 days.

Calculation of Leave

Once an employee becomes eligible for leave, the calculation part comes into play. They will get leave at the rate of one day for every 20 days physically present. This means the number of leaves earned is calculated based on the actual days worked.

For example, an employee had worked for 155 days in the year 2019. There were 52 off days and 13 holidays (festivals and national holidays). They were under layoff for 5 days in 2019. Additionally, they had taken medical or ESI leave for 5 days due to an accident while on duty. In addition to the medical leave (on the grounds of an accident while on duty), they had taken 10 days of paid leave during 2019. The total working days (paid days), inclusive of paid holidays, paid weekly off days, layoff days, medical leave, and casual leave, amounted to 240 days. They are eligible to earn leave in 2020. Their leave for the year 2020 will be calculated on the basis of one day for every 20 days physically worked, which is 155/20, resulting in 7.75 or 8 days. This means that for eligibility, all paid leave days and those unpaid leaves due to ESI leave taken after the accident while on duty are considered days worked, but they will earn leave only for the days actually worked.

Normally, in a year of 365 days, there are 52 off days and around 10 holidays. An employee who rarely takes any leave can work for 303 days. In this case, the total leave that they may earn is 15 days. Even if permitted to work on all days (which is, of course, illegal), the total leave may be 18.

Thank you, Madhu, sir, for your valuable inputs. To calculate earned leaves, we have to consider the actual days worked by an adult worker in the factory. I have seen many statutory consultants calculating earned leaves by including weekly offs and public holidays and also incorporating them into calculating 240 working days.

To determine eligibility, consider the PAID holidays, weekly off days, leave days, and lay off days but do not include them when counting the number of days earned. An employee who has not worked for 240 days, including paid holidays, in the previous year will not qualify for earned leave in the current year. Once an employee meets the eligibility criteria, the number of leaves earned will be based solely on the actual days present.

Hello, sir. Can you explain why 240 days are considered when calculating earned leave annually? Is there a specific reason for choosing 240 days only?

240 days is the cutoff point set in various labor Acts in India.