How Should We Revamp Our Leave Policy to Balance Flexibility and Accountability in a Software Company?

Hi all,

I have recently joined a software company based in the UK. We are about to make some amendments to the current leave policy. Please share your thoughts on what the leave policy should be in a software company. Currently, we have a total of 20 leaves in a financial year from January to December. There is a policy of encashment, allowing for a maximum of 10 leaves in any given year. We are considering 2 leaves per month, and anyone taking more than 2 leaves is considered as Leave Without Pay (LWP). However, the management believes that changes are necessary as employees are taking it easy, knowing that any leaves taken in excess of 2 will be compensated with the encashment of 10 leaves at the end of the year. Additionally, LWP and leave encashment are calculated based on the gross salary.

Please share your valuable input on this matter. I look forward to a quick response.

Thanks in advance.

Nisha

Hello friend,

I hope that the company is considering leave rules in India. If so, please find suggested leave rules in the attached Word file. However, if you want to frame leave rules for the UK, you may need to study similar industries in the UK.

Hope you will find the attachment useful. You may discuss this within HR and with some more departmental heads to refine and finalize a proposal. This can then be put up for the approval of top management.

Regards, Nishikant

Hi Nisha,

If you are providing 2 days of leave in a month, then it amounts to 24 leaves in a year. Since there is no bifurcation of the leave structure, as it is not divided into casual or sick leave, it may be termed as All-Purpose Leave, which is very common in the system these days.

Please make a policy clearly stating that any leave must be availed with the prior permission of seniors, and more than 2 leaves in a month shall not be entertained except in emergencies.

Furthermore, clarify that only the balanced leaves of the calendar year shall be encashed at the end of the calendar year. Otherwise, the encashment of 10 extra leaves at the end of the year will lead to a total of 24+10 = 34 leaves in a calendar year.

I hope this information helps you solve your query to some extent.

Regards,
Amit Seth

Dear Nisha,

Better bifurcate leave. Check Shops and Establishment Act and if the law provides for separate Casual Leave and Earned Leave, provide accordingly.

I suggest the following in your leave policy:

1. Casual/Sick leave - say 12 days in a year.

2. This should be restricted to 2 days in a month, and if it exceeds, support with a medical practitioner.

3. This will lapse every year.

4. Prior approval for casual leave.

5. Provide for earned leave for 12 days in a year.

6. Will get credited at the end of the year on a prorata basis.

7. This will be allowed only three times in a year.

8. Allow carry forward for three years; this is a legal requirement.

9. Allow encashment, and one condition should be that he or she must leave behind at least 5 days of Earned leave.

10. Encashment should always be in Basic plus DA (if DA is paid) only and not on gross. This must be strictly adhered to.

Many manufacturing companies underwent struggle before finalizing all these issues, and IT Companies should leverage the knowledge available in this area.

Siva

Thank you, Amit and Siva, for the valuable inputs. I would like to know what the trend is in software companies. If you can provide a generalized leave policy, it would be easier for us to categorize our requirements accordingly. Please suggest.

Regards,
Nisha.

Hi Amit Seth,

Thank you, Nisha.

In general, most of the IT companies follow a structure of:
- PL or EL: 16 or 18 days
- CL: 8 days
- SL: 8 days

One can avail the same on a pro-rata basis only. Generally, up to 15 PL can be carried forward to the next year if not availed. Additionally, SL can also be carried forward to the next calendar year, but it will not be encashed at the time of encashment.

Nowadays, leave encashment is done at the time of separation from the company. However, some still encash the same at the end of the calendar year.

Regards,
Amit Seth.

Dear Nisha,

There is not much of a difference between software, service, or manufacturing in this regard. You also need to provide some basics as per the law. Ideally, stick to the Shops and Establishments Act for leave. Provide leave encashment in such a manner that only limited leave is encashed every year.

Siva

Hi Seniors,

Please provide me with at least some feedback, as I need to frame the policy as soon as possible. Please let me know if there are any drawbacks in the existing policy as mentioned in my previous post.

Thanks in advance.

Nisha.

Hi Friends,

I have just recently joined a company as HR Operations. We are about to create policies related to "Attendance Management" and "Leave Management". Can you suggest how I should prepare the Attendance and Leave policies?