The number of leaves entitlement in a company depend upon the state you are in. Every state has different leave entitlement and leaves policies which should be seen before one defines the leave policy of your company. The leave policy of a company cannot be less than that mentioned by the State’s shop and establishment act.
Generally, all State Legislation has a common provision for major matters. They provide at least seven holidays for national and other festivals. Republic Day, Independence Day, and Mahatma Gandhi’s birthday are compulsory holidays. Employer and Employees had given the right to decide remaining national and festival holidays.
Earned leaves/ Privilege leaves: These are the leaves that are earned in the previous year and enjoyed in the preceding years. These are also known as privilege leave this can be carry forward for the quantum up to a total of three years and vary from state to state as per the shop & establishment act. These are encashable on basic salary to the employee. the condition for taking these leaves usually differ from company to company but normally in advance at least 15 days. this can be clubbed with sick leave if sick leave does not balance with the employee.
Casual Leave: These leave are granted for certain unforeseen situations or where you are required to go for one or two days’ leaves. In the case of casual leave normally company’s strict maximum to 3 days in a month. In these cases either the person has to take the permission in advance or has to be regulated on joining. this leave is normally never clubbed with Privilege leave, but it can be clubbed with sick leave if there is no sick leave balance. Again quantum var from state to state as per shop & establishment act, normally this leave is not encashable or never carried forward. these days to attract people or to reduce absenteeism at the end of the year the balance Casual leave is converted to PL in the leave account.
Leave without pay: If a person does have any leave to his balance and the situation warrants him to take the leave, the leave is granted by the Company as loss of pay or which may be adjusted against the future leave or as a special case the special paid leave based on the person contributes to the Company at management discretion.
Compensatory off This leave is granted if the person comes on work during the holidays, normally compensated as leave to be taken or as an encashable option.
Leaves can be broadly divided based on their applicability to establishments covered under the Factories Act and the Shops and Establishments Act. Leave is calculated for the calendar year from January to December.
|Leave for Shops & Establishment
|Type Of Leave
|Max C/F Days
|Casual Leave (Days)
|Earned / Privilege Leave
|21 days (For every 240 days worked)
Leaves as per Factories Act apply to all Management Staff, Executives, Supervisors, workers, and contract workers as all of them fall under the definition of ‘worker’ under the Factories Act.
- If the Employee has quit or has been terminated, his earned leave balance should be paid to the employee and in case of death, to the nominee, within 2 days.
- Any worker who has applied for leave and has not been granted the same, such refused leave shall be carried forward without any limit.
- Leave can be calculated on Basic wages and DA.
- Leave book & Leave Register to be maintained for each worker
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