Can We Adjust Casual Leave Against Leave Without Pay if It's Authorized Retrospectively? Seeking Advice!

Hello everyone! I am taking care of the HR Department of my organization.

HR Practices in My Organization

My organization has the following practices:
1. Probation period of 6 months.
2. Sick Leaves and Casual Leaves of 10 days each in a year (Jan to Dec); pro rata for those joining in between.
3. Sick Leave can be carried forward to the next year, but Casual Leave gets lapsed if not availed.
4. Sick Leave is permissible from day one (immediately on joining).
5. Casual Leave is permissible to be availed after the probation, with eligibility from the retrospective date of joining.

Query Regarding Leave Adjustment

Now, the query/difference of opinion with the Management arose due to the following case:
(a) An employee joined on 14th June and was confirmed on 14th December. As such, he became eligible for 5 days of Casual Leave on a pro-rata basis.
(b) Due to self-illness, the employee was forced to take Leave without Pay (LWP) for 12 days in November (after he had already availed 5 days of Sick Leave).
(c) In December, he has 3 days going as LWP. However, against the credit of 5 days Casual Leave, he didn't avail ANY Casual Leave.

As such, I opined to the management that we can consider adjusting 3 days of Casual Leave against the LWP and not deduct salary. The remaining 2 days of Casual Leave can also be compensated against the LWP of the last month (Adjustment is permissible). However, the management consulted one of the "HR experts" who advised that as the employee availed Leaves-LWP before his date of confirmation, i.e., 14.12.2024, Casual Leave cannot be adjusted! My contention was if Casual Leave is authorized retrospectively, why can it not be adjusted?

I will be happy to receive valuable opinions/feedback, please.

Thanks and regards,

Rushabh Pandya

First of all, you cannot restrict any leave for the reason that the employee is on probation. If your establishment is a shop coming under the Shops and Commercial Establishments Act (state Act), then there are three types of leaves: sick leave, casual leave, and earned or privileged leave. Both CL and SL are available right from joining, whereas the EL will accrue after 12 months of service.

Nowhere is it mentioned that CL or SL can be availed only after the employee is confirmed. Therefore, refusing an employee any leave on a technical ground is bad in law. Certainly, any leave which is over and above the leaves admissible as per law can be restricted according to your/management decisions and policies.

If your establishment is a manufacturing undertaking coming under the scope of the Factories Act, and you give CL and SL during the initial one year of an employee's joining, then you can restrict the leave according to your policy because as per the Factories Act, the only leave admissible is EL, which will accrue only after 12 months of joining.

Dear Rushabh Pandya,

The "HR expert's advice seems to be confused and not valid. You need to follow the Leave Rule of your organization; it gives an impression that your company has no policy for the management of leave.

In this crisis, the management can take a decision to approve because your policy is faulty and wrong. How can your policy make one's leave lapse without giving an opportunity to use it, as has happened in this case? Think of a person who is joining the company after June; they would not be able to see the CL in their leave book because CL will lapse prior to crediting at the end of the calendar year. You should talk to your top management for a change in policy, as your present policy is lopsided and against the employees' welfare.

Understanding Leave Policies Under the Shops and Establishments Act

In case the organization is covered under the Shops and Establishments Act, kindly check the leaves covered under it. It differs from state to state. Casual Leave (CL) is not covered under the Factories Act. However, no one stops you from creating additional benefits of carrying forward any type of leave. It is prudent to understand what the Acts state, and then you may seek approval for additional benefits. No Act states that CL or SL can be carried forward. Only Earned Leave (EL) can be carried forward and accumulated up to the limit mentioned in the Factories Act or the Shops and Establishments Act of the state.

Leave Policies in Organizations

Generally speaking, many establishments follow a combination of CL, EL/PL, and SL. While CL can be availed proportionately for the service rendered, even during the probation period, other types get credited only for the service rendered for the full or part of the year. The number of days varies from establishment to establishment as most of these establishments follow past practices and local needs.

Casual Leave and Emergency Situations

As we know, CL is normally availed for half or a full day at a time in cases of immediate requirement. Sometimes more than one day is also granted when no other leave is available in the credit. There is a need to tackle some emergency, sickness, or personal tragedy when there is no leave available in the credit. Here comes into play the discretion of the HOD or CEO who, considering the gravity of the situation, agrees, as a special case, to come to the rescue of the probationer by allowing leave against the future accrual of EL/SL.

Discretionary Power in Leave Management

I won't say this type of discretionary power should be used routinely, but it should be reserved for deserving employees and in helpless circumstances. I support the stand of HR in their willingness to 'help in need' (and with a view to avoid LWP early in the career of a fresher, where money is immaterial but the entry in his/her record book is significant). However, the rider is, 'this accommodation can’t be claimed as a matter of right' or quoted as a precedent.

Hi,

In the Industrial Employment Standing Orders Act of 1946, it's clearly stated that the probation period is 3 months. Relying on the Honorable Supreme Court judgment in the case of Western India Match Limited in 1973, the probation period can be extended to a maximum of twice the original probation period.

Under the Bombay Standing Orders Act, the employer is required to confirm the status of a probationary employee at the end of the probation period within 7 days.

Companies are drafting rules shrewdly with the probation clause "deemed to be in probation unless it's confirmed in writing." This clause is often misused as it hangs indefinitely.

Companies cannot overrule the guidelines of the Standing Orders Act and cannot make rules that go against what is permissible in the Government's Standing Orders Act of 1946.

Companies expect results from day one of an employee's joining but draft rules to benefit their interests only. The long probation period for an experienced employee is not justified and unreasonable.

The guidelines are already in place but sadly not enforced.

There are companies that do not have the standing orders certified by the authorities.

Hello, Your approach is logical and employee-friendly, considering that CL is granted retrospectively from the date of joining.

- The policy states that CL is credited retrospectively upon confirmation, meaning the employee had already "earned" those 5 days from June to December.
- Since CL is not a post-confirmation benefit but rather a deferred right, there is no reason why it cannot be used for prior LWP days.
- Since the CL is earned from the date of joining, adjusting against LWP is fair and prevents unnecessary salary deductions.
- Adjusting CL would boost employee morale and show that HR is acting in good faith.
- Discuss with management again, present the argument logically.
- Propose a written clarification on CL usage. If management insists on their stance, get a documented rule for future consistency.