Indian labour laws lays down guidelines that companies need to follow. Depending on whether your company is getting covered under the Factories Act or The Shops & Establishment Act, the following would be part of your company’s leave policy.
Types of Leave:
Privilege Leave/Earned Leave (PL/EL): Simply put, this means that you have “earned” it (Reminds us of the Bourneville ad!). These are the leaves which are earned in the previous year/month and enjoyed in the preceding years/months. These leaves can be accumulated/encashed by you at the end of the year. Employees are expected to consider these as planned leaves, and hence inform the management at least 15 days in advance, before availing this leave.
Companies credit the annual entitlement of this leave to the employees at the time of their joining or the beginning of the year, however, it’s entitlement is given mostly every month. For example, if you are entitled to get 15 EL in a year, then you get 1.25 EL granted to your leave kitty every month. That’s as per law, companies can do. Some companies don’t get into this monthly credit of leaves, and grant all 15 days together. It does give them a financial impact while doing pay-out calculations during the exit of the employee, but that’s a call they take!
As per the Factory Act, 1948 one day for every twenty days of work performed by the employed person during the previous calendar year is his leave entitlement for the year.
Casual Leave (CL): Companies are required to grant certain casual leaves to take care of emergencies or unforeseen circumstances that could come in an employee’s life. Minimum 7 days of casual leave in a year needs to be provided by the company. Each state has their own specific Shops & Establishment rules and hence this number could be 14 if you belong to Madhya Pradesh or Chhattisgarh. Casual leaves cannot be accumulated or encashed by employees.
Sick Leave (SL): An employer needs to provide a few days extra as leave in the event of the employee falling sick. The rules for this again varies from state to state. Some states like Maharashtra do not provide a separate quota for sick or casual leaves (their EL is capped to 21, one of the highest) and others like West Bengal, Tripura and Bihar provide 12 to 14 days of sick leave, but on half pay. Again, most companies these days consider granting this particular leave on humanitarian grounds and on case-to-case basis takes the exception of providing much more than what the law specifies.
Depending on the state that you belong to, you could be getting anywhere between 22 to 40 days of EL+CL+SL. But, organizations have a standard policy for the entire organization (and not state wise). So while your company could give you 40 days of leave all combined, another could be giving 27. In the latter, the company runs the risk of getting a notice from the state labour department where it’s less than the state’s prescribed limit of leaves (Uttrakhand for example, specifies giving minimum 40 days of EL, SL, CL combined).
This table will give you a view of the mandatory EL, CL, SL prescribed by various state Shops & Establishment Act (as of mid 2016) Entitlement-of-leaves-across-states.xlsx .
Leave Without Pay (LWP): There could be a possibility that an employee has exhausted his quota of leaves for the year, but still needs to take leave. In this case, he can take LWP. The individual is not paid salary for that particular day of absenteeism. However, again, companies may choose to not use this strictly and adjust the upcoming EL of the employee with this particular leave.
Mandatory Holidays: Apart from the leaves, an employer is required to give mandatory national & festival holidays in a year. Independence Day (15-August), Republic Day (26-January) and Gandhi Jayanti (02-October) are mandatory holidays for all states. There are states that specify giving only these 3 as mandatory holidays, whereas there are some that say give 5 mandatory holiday, plus 5 festival holidays. It’s not possible for organizations to release a state wise holiday list and hence there is one common holiday list that gets rolled out for the company (with minimum 10 such holidays), with the exception that a Pongal Holiday could only be given in Southern regions and not in North (for example).
If your company only has operations in Delhi, then you would only be entitled for the 3 mandatory holidays and your employer is under no obligation to give you an off on a Diwali or a Holi.
Maternity Leave: The government has recently passed a bill to revise the maternity leave from 12 weeks to 26 weeks. Some progressive organizations had already implemented a 6-month maternity leave, but getting a mandatory stamp from the government ensures that all working mothers in India would have a common leave benefit.
Leave Encashment: While The shops & establishment act doesn’t specify anything on leave encashment, as per Chapter VIII of Factories Act, the employee or his nominee is entitled to wages in lieu of the quantum of leave to which he was entitled prior to the separation. The calculation of leave encashment is, sadly, not uniform across corporates. While some do it on gross pay, others do it on basic. It’s usually calculated as:
(Basic/days in a month) X No. of days of leave to be encashed
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