Designing Leave Policies: How Many Leaves Should Be Mandatory for Companies?

I am associated with a few companies where I have to design the leave policy. As I am a consultant, the management asked me to design. How many leaves are compulsory for any company? If they want to give accumulative leaves or segregate them into CL, SL, PL, please guide me.

Dear Anand,

Understanding Leave as a Statutory Employment Benefit

Leave is a statutory employment benefit prescribed under the employment-specific labor law applicable to any particular business entity, which may be owned by a company registered under the Companies Act. The establishment can be anything like a factory, shop, or commercial establishment, among others. The types and scales of leave differ according to the type of the individual establishment concerned. Accumulation of leave and surrender of accumulated leave on termination of employment is allowed only in respect of earned leave. All other kinds of leave lapse at the close of every calendar year.

Considerations for Designing a Leave Policy

Depending on its activities, a single company may have different establishments under its administrative control, such as factories, warehouses, separate administrative offices, independent R&D centers, etc. Therefore, devise the leave policy accordingly.

Understanding the Nature of Organizations

First and foremost, what is the nature of the organizations you are dealing with? Do they fall under the ambit of the Shops and Establishment Act or the Factories Act?

Considerations for Leave Policy

The nature of leaves, including accumulation, the process of crediting, and the ratio of leaves to be credited based on the number of days worked, will depend on the above factor. If you are creating a policy now, please consider reviewing your policy in light of the new Labour Codes as well.

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