How Do You Handle Employee Pushback on Leave Policies? Is There a Legal Standpoint?

Hi, I recently joined a logistics company. I proposed creating a leave policy, but my employee is refusing. They are adamant about not wanting to deal with CL and EL. Their idea is that if an employee takes leave, their salary will be deducted, and if they do not take leave, we will provide them with extra payment for that month.

Is there any written act or law regarding this matter?

Regards,
Nidhi

Dear Shruti Mathur,

If yours is a logistics company, then the provisions of the Shops and Establishment Act of your state (presumably Delhi) apply to your company. The company's administration must abide by the provisions. If the labor authorities notice any violations, it could create problems.

For every 20 days of attendance, an employee is eligible for a day's leave. Out of 365 days of the year, remove 52 Sundays and 10 closed holidays. Therefore, the working days are 303. When you divide this number by 20, you get 15. So each employee is eligible to get at least 15 days of leave. If the Shops and Establishment Act of your state has made provisions for casual or sick leave, these also need to be added.

Regardless of the industry, there is a shortage of talent in the job market. To retain employees, companies take measures that go beyond the statutory provisions. If your company does not provide what is statutorily admissible, it could spread a negative image of your company, making it difficult to attract candidates. Additionally, denying statutory benefits could increase employee attrition. The cost of lost opportunities and employee attrition could be greater than the cost of employee leave.

In short, it is advisable to follow the law. Infringing on the law may give temporary benefits, but these will last only until the infringement is detected. In one stroke, the gains made will be nullified.

Thanks,

Dinesh Divekar

Hi Nidhi,

Requirement under the Delhi Shop and Establishment Act

Sec 22. Leave

(1) Every person employed in an establishment shall be entitled:
(a) After every twelve months of continuous employment, to privilege leave for a total period of not less than fifteen days;
(b) In every year, to sickness or casual leave for a total period of not less than twelve days;

Provided further that a watchman or caretaker who has completed a period of twelve months in continuous employment and to whom the provisions of Section 8, 10, 11, 13, and 17 do not apply by virtue of an exemption granted under Section 4, shall be entitled to not less than thirty days' privilege leave.

(1A) Privilege leave can be accumulated up to three times the PL granted under law, custom, or award.

(2) The employer shall pay full wages for the period of leave due to the employee on termination or resignation.

Wages During Leave

Every employee shall be paid for the period of their leave at a rate equivalent to the daily average of their wages for the days on which they actually worked during the preceding three months, exclusive of any earnings in respect of overtime but inclusive of dearness allowance.

(I have paraphrased some of the information to make it easier for non-lawyers to read. You can always look up the exact wording of the section).

The act not only states that the company has to provide leave but also specifies how much and what type. It also details how leave salary is computed. The company has no choice but to follow it. If they do not comply, they are liable to prosecution, which only requires one employee to file a complaint, and they will be at your door.

However, it is not compulsory to create a leave policy. But it is compulsory to allow the leave required by the act. Nothing stops you from offering better leave terms.

Also, refer to Sec 24: Contracting Out

Any contract or agreement, whether made before or after the commencement of the Delhi Shops and Establishments (Amendment) Act, 1970, whereby an employee relinquishes any right conferred by this Act shall be null and void insofar as it purports to deprive them of such right.

When existing laws or acts and rules are adequate to govern the leave aspects in an establishment, there is no compulsion to have a 'leave policy' in place. However, an elaborate 'leave policy' is always desirable to deal with circumstances as and when they arise. If any administration doesn't advocate drafting and implementing an exclusive 'leave policy,' such administration should be prepared to abide by the applicable acts/rules.