Is My Earned Leave Calculation Right Under the Karnataka Shops & Establishment Act?

We are trying to establish a leave policy according to the Karnataka Shops & Establishment Act, which states that an employee is eligible for 1 day of earned leave for every 20 working days. Kindly clarify whether my calculation below is correct.

Calculation of Earned Leave

So, as per the notification, below is the calculation:

b) 22 working days in a month (4 Sundays & 4 Saturdays as weekly offs) 22 working days * 12 months = 264 working days in a year. Hence, earned leave would be = 264/20 = 13.2 days in a year.

We have Saturday and Sunday as weekly offs. If any employee is on paid leaves (PL, BL, or SL) or on a company-established holiday, it is considered a working day. For example:

Employee A: In Jan 2024, worked from Jan 1st to 31st on all working days, excluding Jan 1st, Jan 15th, and Jan 26th as holidays. So, their 1 leave will be credited on Jan 31st as their 20 working days will be completed.

Employee B: In Jan 2024, worked from Jan 1st to 31st on all working days, excluding Jan 1st, Jan 15th, and Jan 26th as holidays. Additionally, he has taken Jan 2nd to Jan 5th as paid leave carried forward from last year. So, their 20 working days will be completed on Feb 7th. 1 leave will be credited on 7th Feb as their 20 working days will be completed.

At the end of the year, both employees will have a different balance of accrued earned leaves according to this calculation. Is this the right way to calculate, or should we have a standard of 15 or 18 leaves in a year for all?

Also, paid leaves and holidays are considered as working days as they are included in the 264 working days in a year. Otherwise, there will be very few working days.

The calculation you've provided based on the Karnataka Shops & Establishment Act seems to be correct, but there are a few aspects to consider:

1. Your calculation of earned leaves: According to the Act, an employee is entitled to one day of earned leave for every 20 days of work performed. In your case, 22 working days per month over 12 months results in 264 working days a year. Hence, earned leave would be 264/20=13.2 days. However, fractions of leave are usually rounded off, so in practical terms, this would translate to 13 days of earned leave per year.

2. Taking into account paid leave and holidays: Yes, both paid leaves and holidays are considered as working days according to the Act. This is because the employee is considered to be on duty during these days. Therefore, your understanding is correct, and these days should be included in your calculation of 264 working days in a year.

3. Varying leave balances: It's also correct that different employees may end up with different leave balances by the end of the year. This is because the leave balance depends on the actual number of days worked, including paid leaves and holidays. If an employee takes more paid leaves than another, they would accrue fewer earned leaves.

4. Standard leave policy: While the Act provides the minimum leave an employee is entitled to, companies are allowed to be more generous. Therefore, you can certainly establish a policy providing a standard 15 or 18 leaves in a year to all employees if that suits your business needs better.

👩‍💼 Please ensure that your leave policy complies with the Act and any other applicable laws. If you're unsure, you may want to consult with a legal professional.