How Do I Create a Leave Policy for My Startup? Seeking Basic Guidance and Tips

Hi, I need guidance on framing a leave policy for my startup. Kindly help with basic inputs.

Basically, you have to follow the leave provisions as provided in the Shops and Commercial Establishments Act of your state. Of course, if yours is a factory, the leave as per the Factories Act shall be taken as the base for your leave policy.

Leave Provisions Under the Factories Act

As per the Factories Act, the only leave available is annual leave with wages, otherwise referred to as Earned Leave or Privileged Leave. This leave is available to those employees who have worked at least 240 days in the preceding year. The number of leaves that each employee earns is limited to one day for every 20 days worked in the preceding year.

Dear Poster,

You did not mention what kind of start-up (factory, shop, or commercial establishment) for which you need to frame the leave policy. Always consider the opinions and thoughts of management, as they are the ones who need to administer these policies. It is not advisable to change the rules frequently once they have been established.

Thank you.

I may add to what has been suggested by Mr. Madhu. Presumably, your startup falls under the category of Shops & Commercial Establishment as per the applicable state act, i.e., TN. If yes, it's safer to simply copy the provisions contained in the state act & rules, read with the Maternity Benefit Act, in respect of female employees. Additionally, you should adopt the practices being followed in your sector in Chennai.

Formulating Leave Policy

While Earned Leave (EL)/Paid Leave (PL) and sick leave have been covered in the act/rules, casual leave has to be added as per your convenience. You may need to formulate and define the leave policy for the first year of one's service and during the Probation Period, as during this period, no credit of EL/PL/SL will be available for employees recruited afresh. Records/registers as per the act/rule have to be maintained.

Soon after drafting your leave rules, taking into consideration the above points, you should circulate them or put them on your notice board for the guidance of your employees. I've attached the text of the TN Shops Act & rules for your ready reference.

Wishing you all the best.