New Factory Owner Seeking Guidance on Employee Benefits: When Do Leaves and Gratuity Begin?

Dear Sir, We started a factory one year ago. Please tell me when leaves, gratuity, PF, and ESI start?

You should have provided leave with wages right from the start of your business. If it's a factory, your leave entitlement shall begin after 12 months. Start Employee State Insurance (ESI) when your employee count reaches 10 and Employee Provident Fund (EPF) when it reaches 20. Your establishment will be covered by the Gratuity Act from the start if it's a factory; for a commercial establishment, coverage begins when the employee count reaches 10.

As per the Factories Act, leave should be calculated based on actual working days, subject to a minimum of 240 days in a calendar year, divided by 20. Any fractional leave of 0.5 and above should be considered as 1 day. To qualify for the 240 days, the number of leaves enjoyed the previous year should be considered, but leaves earned will be based on the actual number of days present. For example, if an employee works for 230 days in a calendar year and enjoyed 12 days of leave, they are eligible for earning leave (230 + 12 = 242), but the actual leave earned will be 230/20 = 11.5, i.e., 12 days.

Coverage for PF is required if there are 20 or more employees, including contractual employees. For ESIC and Gratuity, it is necessary to have 10 or more employees, including contractual employees.

Regards, S K Bandyopadhyay

Do you mean "Sandwiching"? If you are a factory covered by the Factories Act and the person has availed leave with wages as per the Factories Act, then the holiday intervening should not be counted as leave. In other cases, you can check your state rules regarding this. National Holidays vs. Festival Holidays National holidays are marked differently from festival holidays under various state enactments concerning holidays. As such, national holidays will have to be paid holidays irrespective of any restrictions regarding leaves. However, if the leave prior to and following a holiday is unpaid/loss of pay leave, then the holidays shall also be considered as loss of pay.