Confused About Leave Allotment After One Year? Seeking Advice from Experienced HR Peers

Greetings to the Seniors & Friends, my query is about the allotment of PL/EL to the employees who have completed their one year in June 2021. The company policy is to allot 21 EL after the completion of one year.

One of the employees joined in June 2020 and has completed one year. As per my knowledge, he is eligible for 12 EL for the current year. According to the leave calendar, 21 leave days will be credited in January 2022.

Respected seniors, kindly provide your opinion on this matter as it would be very valuable.

Regards

There is no mention of the type of your establishment, whether it is a factory or an establishment covered under the State Shops & Estt Act. Anyway, conceptually, PL and EL are similar in terms of nature, accrual, availment, provision for carryover to the future subject to certain ceilings, and encashment upon the termination of employment. However, in scale, they differ.

The 12 days EL in 2021 that you mentioned is the leave earned in 2020-21, and the 21 days EL granted after completion of one year by the employee is as per your company policy. It is important to note that the scale of leave prescribed by any law represents a minimum standard only. Therefore, an employer is free to adopt a higher scale.

Annual Leave Provision in the Factories Act 1948

There is some confusion regarding the Annual Leave ("Earned Leave or Privilege Leave") provision in the Factories Act 1948. It is clarified that it is not necessary to work for 240 days in a calendar year before starting to earn Annual Leave. The Act provides that a worker whose service commences other than on the first day of January is entitled to leave with wages at the rate of one day for every twenty days worked if they have worked for two-thirds of the total number of days in the remainder of the calendar year.

In subsequent years of service, since the employee is in service on 1st January, the completion of 240 days of actual working is necessary to earn leave at a rate of 1:20. So, regarding your question, presuming you are a factory as per the Factories Act 1948, you need to verify whether the employee has actually worked for two-thirds of the total number of days in the remainder of the calendar year (from June to December 2020), and that number of leaves could be credited to the employee's leave account at the start of the year 2021.

In January 2022, the employee would get credited leave quantum based on 1:20 for the number of days worked, provided the days of actual working are 240 or more in the calendar year 2021. For the purpose of computing 240 days, any days of layoff, by agreement or contract, or as permissible under the standing orders; in the case of a female worker, maternity leave for any number of days not exceeding twelve weeks; and the leave earned in the year prior to that in which the leave is enjoyed, shall be deemed to be days on which the worker has worked in a factory, but they shall not earn leave for these days.

We come under the Shops & Establishments Act.

As per the reply, I understand that if an employee joins in June 2020 and completes one year in June 2021, their eligibility for Earned Leave (EL) this year is 21 days. Is that correct? Sorry for the confusion.

Thank you for your reply, but I am finding it difficult to understand how much leave should be allotted.

Leave Allotment Query

As per company policy, 21 leaves are granted after the completion of one year. The employee joined in June 2020, and this month marks the completion of one year.

Since leaves are allocated based on the calendar year (Jan - Dec), is the employee eligible for the full 21 days, or should it be calculated on a pro-rata basis, i.e., from June - Dec, with 10 earned leaves to be credited?

Thank you.

Presuming that the AP Shop & Establishment Act 1988 applies, the relevant provision is extracted below. The statutory requirement is to provide 15 days of leave after the completion of at least two hundred and forty days in a period of 12 months. You are providing 21 days as a rightful welfare measure. Accordingly, in June 2021, credit the 21 days in the leave account of the employee. Again, at the start of the next calendar year (January 2022), add proportionate leave for the period from June to December 2021.

Leave

(1) Every employee who has served for a period of two hundred and forty days or more during a continuous period of twelve months in any establishment shall be entitled during the subsequent period of twelve months to leave with wages for a period of fifteen days, provided that such leave with wages may be accumulated up to a maximum period of sixty days.

Leave Credit Policy for Employees

Credit 21 days of leave in June 2021 after the completion of one year, and then provide proportionate leave as of January 2022 for the period from July to December 2021.

Compliance with Statutory Guidelines

The quantum and different types of leave should be as per the Factories Act, S&E Act, or as per certified Standing Orders if applicable. The company's leave policy cannot offer less than statutory guidelines.

Regards, S K Bandyopadhyay (WB, Howrah) CEO - USD HR Solutions

http://www.usdhrs.in