Are New Employees Joining Mid-Year Eligible for Annual Leave Under the Factories Act?

Dear All,

If an employee joins an organization later in the calendar year, for example, in July or August, are they eligible for annual leave with wages as per the Factories Act? If yes, when can they avail of the leaves granted to them? If not, why?

According to the 240 days working eligibility, one may not be eligible. Explanation 2 of the annual leave with wages states: "A worker whose service commences otherwise than on the first day of January shall be entitled to leave with wages at the rate laid down in clause (i) or, as the case may be, clause (ii) of sub-section (1) if he has worked for two-thirds of the total number of days in the remainder of the calendar year."

Is an employee who has joined later in the calendar year eligible for PL/EL, and when can they avail of it? Is there any law stating that they can avail of the same after one year?

Regards,
Nitesh

Eligibility for Paid Leave for New Employees

An employee who has joined the company during the calendar year is eligible for paid leave in the following year, provided they have worked at least 3 months in the year.

Proportionate Leave for Other Employees

For everyone else, it will be proportionate. The law requires that the leave ledger is filled on January 1 of each subsequent year.

Checking Compliance with Rules

You need to check factory rules, Shop & Establishment rules, and standing orders for your organization to get the correct answer. The above is generic.

Dear Nitesh,

Types of Leave

Leave comes in four kinds: PL, SL, CL, and LW/OPay. All these are sanctioned leaves for which no action is taken. Any other absence is considered misconduct, and action can be taken.

Eligibility for Leave

The reason for writing the above is that, even on humanitarian grounds, an employee may require leave due to unforeseen circumstances, regardless of whether they have worked for a full year or not.

Employees in employment on January 1st must have worked for 240 days in that year to be eligible for leave in the subsequent year. This requirement is now being reduced to 180 days in the new Code, as 240 days represent 2/3rd of 365. Similarly, for those who join after January 1st, they must work 2/3 of the calendar days until December 31st to be eligible for PL at the rate of 1 day leave for every 20 days of actual worked days in the subsequent year. In any case, PL is credited on January 1st every year and is considered earned leave.

CL and SL Provisions

CL or SL, on the other hand, are not earned but are granted under Standing Orders or Service Rules. The quantity of CL or SL is determined by Management in the first year, and later it may be negotiated by the Union during settlements. These leaves are sanctioned in advance on January 1st. For those who join after January 1st, a proportionate amount of leave is credited on the day of their employment. For instance, if one joins on July 1st, half CL and half SL will be credited to their account on that day. This provision is in place to accommodate situations where an employee falls ill or has important personal matters requiring leave.

All leaves, including PL earned in the previous year and CL and SL in advance, are credited on January 1st.

Vibhakar Ramtirthkar
Pune.