Navigating State Leave Policies: How to Justify Using Karnataka's Policy Across India?

We have a corporate office in Bangalore, Karnataka, and 21 branch offices PAN India across 15 different states. Currently, we are implementing the Karnataka state leave policy in all branches. Could you please advise us on whether we need to adhere to the respective state Shops & Establishment Act? Or can we explain to internal auditors that we are following the Karnataka state leave policy due to our base location and corporate office being in Karnataka, in accordance with the S&E Act?

Compliance Issues with State Leave Policies

Are there any compliance issues if we have adopted the Karnataka state leave policy for all states? One of the challenges we are facing is managing leave credits and debits for employees across 15 states in PAN India annually, which is not feasible to do regularly. We seek your valuable input on how to justify this situation.

Thank you.

Dear Mr. Raju Gowda,

Your 21 branch offices across PAN India are registered under the respective State Shops & Commercial Establishments Act. Consequently, employees are eligible for leaves as provided therein. The Karnataka Shops & Commercial Establishments Act, 1961 has jurisdictional limitations, i.e., Karnataka.

Please do not look at your convenience. You have to maintain records state-wise. If the leaves provided under the Karnataka Shops Act are more than leaves in other states, you can continue to provide them.

Compliance with State-Specific Leave Policies

Branch offices in respective states are supposed to function as per the Shops and Commercial Establishment Act and Rules of such states. This will lead to 15 different sets of leave rules and holiday lists. I recommend beginning planning now to get it done so that you can avoid non-compliance issues at a later stage.

Enforcing such a comprehensive policy and then tracking leave and holidays also requires tremendous effort. Try reliable and scalable solutions like greytHR for automation purposes. I have seen the month-end rush and stress of HR and Payroll managers in many firms with employees PAN India.

Dear Raju-Gowda,

In continuation of the views of our learned friends, with which I am in complete agreement, I would like to add as follows:

Jurisdiction in Service Condition Disputes

For any disputes relating to service conditions like leave, wages/salary, and allowances, or termination of employment, the actual place of work determines jurisdiction, notwithstanding the place from where they are administratively controlled in matters like appointment, transfer, etc.

Inter-State Employee Transfers

Therefore, when an organization has a pan-India presence and operations, inter-state transfer of employees due to work exigencies cannot be ruled out. Even if you rule out that possibility and maintain only intra-state norms in respect of transfers, promotions, etc., you have to abide by the provisions of the Act and Rules applicable to that state only. Thus, it becomes imperative that every organization with branches in more than one state must strictly maintain uniform conditions of employment, like leave and wages, to avoid disparity and ensure compliance with all such states' laws as well.

Uniform Leave Benefits Across States

Particularly, when such a pan-India establishment falls under different State S&E Acts, you have to compare the leave provisions of various state acts and strike a balance by adopting the highest scale of leave possible. This will ensure uniform leave benefits to employees irrespective of their place of posting and ease compliance for the management as well.

I concur with the views expressed here that in matters of leave compliance, each State Shops Act will have to be followed. In the case of Pan India presence, you may consider a uniform leave policy for all states if the leave quantum is equal to or better than the highest in any State. This, though, may result in giving more than some State Shops Act; it will preempt administrative hassles in terms of record-keeping of leaves and in inter-state transfers of the staff. If you don't favor this, your option is to follow each State's leave provisions.

Regards, Vinayak Nagarkar HR and Employee Relations Consultant

I am hereby attaching a leave applicability sheet as per the different Shop & Establishment Act. If companies have offices in more than one state registered under the S&E Act, the same sheet can be used for calculating leaves.

Regards