Is Your Privilege Leave Calculated Pro Rata from Your Joining Date? Let's Discuss!

Hi, I would like to inquire if the calculation of Privilege Leave is done pro-rata, taking into account the date of joining. According to my company's policy, 1.5 days are added at the end of each month.
Thanks

Hi, an employee becomes eligible for Privilege Leave (or Earned Leave) only after completing one year of continuous service with the organization. Whether you follow the calendar year or financial year based on the DOJ, PL can be allotted on a pro-rata basis. If you follow the financial year and the employee joins by August, then leave should be allotted on a pro-rata basis: total leave for the year divided by 12 x 8 (i.e., leave eligibility from August to March of the subsequent year, which is an 8-month period).

Thank you for your prompt response. My company is in KPO, and leave balance accrues from the day employees become permanent. I am still unclear on how much leave an employee who joins on the 25th of the month would accrue. Appreciate the help.

Hi, if the employee joins by the 25th of the month, he/she should not be eligible for leave for that month, and leave can be credited from the subsequent month. The common practice followed among companies is that if the date of joining (DOJ) is after the 15th (or the leave eligibility date falls after the 15th), then leave eligibility will be from the subsequent month.

Since the establishment is not a factory but a commercial establishment in Tamil Nadu (I presume), the Tamil Nadu Shops and Commercial Establishments Act will be applicable to your establishment. As such, you have to give 12 days of sick leave and 12 days of casual leave in a year. Additionally, after the completion of 12 months' service, the employee should be given 12 days of earned leave as well. Although sick leave and casual leave would lapse at the end of the year (normally, the calendar year is considered as the year for this purpose), the unavailed earned leave can be carried forward to the next year, accumulating up to 45 days.

An employee joining at any time during the year shall be given casual leave or sick leave proportionately. Therefore, if an employee joins a company in August, they should be credited with 5 days each of casual leave and sick leave for the year up to December. Since the employee would earn Privilege Leave only after 12 months' service, they may be given credit for it only in 2025. However, if you want to establish a uniform date for crediting the leave, you can credit the earned leave also in January, but the credit shall be made proportionately.

Unlike the Factories Act, reference is not made about physical days worked under the Shops Act. Therefore, leave is credited based on months only. As such, the leave (casual leave and sick leave) is to be credited in advance and not after every month. In practice, when you take a month for calculating the leaves, if the date of joining is prior to the 15th of the month, i.e., any day between the 1st and the 15th, it would be counted as one month, and any date of joining after the 15th would be ignored. Therefore, an employee joining on the 25th would not get leave for that month.

The number of privilege leaves that you give is more than what is required under the law. I hope you have casual leave and sick leave also in force over and above the privilege leave mentioned in the post.