Leave Credit Dilemma: Should We Adjust Our Policy or Change the HRMS Tool for New Joiners?

Hi, We have a leave policy where an employee is given 12 privilege leaves, 0.5 casual, and 0.5 sick leave per month. This is given to the employee irrespective of their probation period, which is 6 months.

Leave Credit Timing in HRMS

In our HRMS system, we have the option of getting these leaves credited either on the 1st of the month or at the end of the month. For now, we have it set for the 1st of every month. So, if an employee joins on the 2nd or any other day of that month, the leaves do not get credited in the HRMS. The vendor of our HRMS tool states that they can't change it. I'm not sure how to tackle this. Do we change the policy or do we change the HRMS tool we have? Is it mandatory that we have the leaves credited on a pro-rata basis for new joiners?

Crediting Privilege Leave (PL) Monthly

Crediting PL every month is not common because PL is earned leave, and an employee earns it after 12 months of service. Depending on the number of leaves available as per the Shops and Commercial Establishments Act of the state, you can provide a certain number of Casual Leave (CL) and Sick Leave (SL) during the first year of service itself. At the same time, if yours is a factory, there is no CL or SL as mandated by law.

If your state's Shops and Commercial Establishments Act provides for 6 days of CL for 12 months, then software providers should find a way to fix the issue of crediting the same manually or automatically on the 2nd and subsequent days of the month. They cannot escape from their responsibilities. To satisfy the software, you should not compromise on the legal part.

Hi Madhu, Thank you for responding. Apologies for the correction here - the PL is credited monthly, 1 PL per month. We have made it eligible for all new joiners. We come under the S&E Act. Do you mean to say that PLs need not be credited or should not be credited? I was under the impression that it is at the discretion of the company to have their own rules on PLs (encashment/carryforward).

I will not say that PL should not be credited every month, but when you do, the very purpose of PL will be defeated. PL is meant for long leaves. At the same time, when you give it in advance, you are providing a privilege that could potentially become a right later on. Therefore, I don't recommend crediting it in advance. You can credit it when it becomes due, that is after 12 months of service and only to those who have worked for 12 months.

In my opinion, crediting PL (Earned Leave) after the employee completes 1 year of service, as suggested by Madhu, can be considered. In other words, the employee has to earn this leave.

Crediting Casual Leave and Sick Leave can commence one month after the employee joins. For example, if the employee joins on the 2nd of June 2024, CL & SL for June can be credited on the 1st of July 2024, and the same can be continued thereafter.

In other words, CL & SL for the current month will be credited only after he completes one month of service and not in advance.

Regards,

MVK

The Andhra Pradesh Shops & Establishments Act, 1988

CHAPTER VII

Leave and Holidays with Wages and Insurance Scheme for Employees

30. Leave: (1) Every employee who has served for a period of two hundred and forty days or more during a continuous period of twelve months in any establishment shall be entitled, during the subsequent period of twelve months, to leave with wages for a period of fifteen days, provided that such leave with wages may be accumulated up to a maximum period of sixty days. Provided that any continuous period of service in an establishment preceding the date on which this Act applies to that establishment shall also count. Provided further that any leave accumulated by an employee in an establishment under the law applicable to that establishment preceding the date on which this Act applies to it shall not be affected. Provided also that every employee in any shop or establishment shall be entitled to encashment of the leave with wages for a period of eight days in every year.

(2) An employee may apply in writing to the employer, not less than seven full working days before the date of availing himself of his leave, to allow all the leave or any portion thereof to which he is entitled under subsection (1). Provided that the number of installments for taking leave shall not exceed three during a period of twelve months.

(3) An employee who has been allowed leave for not less than five days under subsection (2) shall, before his leave begins, be paid the wages due for the period of the leave allowed if he makes a request therefor.

(4) Every employee who has served for a period of not less than two hundred and forty days during a continuous period of twelve months in any establishment shall be entitled to encashment of eight days of leave with wages that has accrued to him under subsection (1) during the subsequent period of twelve months. The employer shall pay to the employee the wages for the leave so encashed by the employee within a week of receipt of the application for such encashment from the employee.

(5) Every employee in any establishment shall also be entitled during his first twelve months of continuous service and during every subsequent twelve months of such service (a) to leave with wages for a period not exceeding twelve days on the ground of any sickness or accident, and (b) to casual leave with wages for a period not exceeding twelve days or any reasonable ground.

(6) Every employee in an establishment after he has put in not less than six months of service under the same employer shall also be entitled to special casual leave not exceeding six days only once during his entire service, if he has undergone vasectomy or tubectomy operation, subject to the production of a certificate therefor from an authorized medical practitioner under whom he has undergone the operation.

(7) If any employee entitled to any leave under subsection (1) is discharged by his employer before he has been allowed such leave, or if the leave applied for by such employee has been refused and if he quits his employment before he has been allowed the leave, the employer shall pay him the amount, payment under this Act in respect of the period of leave.

(8) If an employee is lawfully discharged by his employer when he is sick or suffering from the result of an accident, the employer shall pay him an amount payable under this Act in respect of the period of leave to which he was entitled at the time of his discharge in addition to the amount, if any, payable to him under subsection (3).

(9) An employee in a hostel attached to a school or college or in an establishment maintained in connection with the boarding and lodging of pupils and resident masters shall be allowed the privileges referred to in subsections (1) to (8), reduced, however, proportionately to the period for which he was employed continuously in the previous year or to the period for which he will be employed continuously in the current year, as the case may be; and all references to the periods of leave in subsections (1) and (5) shall be construed accordingly, fractions of less than half a day being disregarded.

The above extract from the AP Shops & Estts Act is sufficient to clarify the query regarding the entitlement to leave. That apart, some establishments might consider crediting earned leave on a pro-rata basis based on merits, for months of services rendered, in "emergency situations" such as accident, acute sickness, marriage, etc., in an exceptional manner, if there is such a practice followed. Other than this, there is no reason for any doubt on 'crediting' earned leave, which arises only after rendering 'continuous service' of one year/every year. However, for the need to avail a day or a couple of days leave during the first year of service or probation period, pro-rata casual leave should be the solution. However, casual leave matters are not dealt with under the Act. Perhaps the applicable Standing Orders should address this aspect.