Hi,
Can anyone shed some light on whether it is a statutory requirement to pay the earned/paid leave to an employee who is on probation and has resigned during probation? Or is it dependent on the organization and the rules they establish?
Rahul Verma
From India, Delhi
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1Can anyone shed some light on whether it is a statutory requirement to pay the earned/paid leave to an employee who is on probation and has resigned during probation? Or is it dependent on the organization and the rules they establish?
Rahul Verma
From India, Delhi
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I think you need to set a certain limit, say one year, i.e., an employee should complete at least one year in that organization before they can ask for repayment of leaves after resignation. What was the probation period of this employee? An employee who is on probation should not be paid PL, etc. Even though I have just entered the corporate world, I have mentioned only what I know, so I would request seniors to help us.
Regards,
Purva
From India, Mumbai
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Regards,
Purva
From India, Mumbai
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This is an SOS call to all seniors and seasoned professionals to help with the above issue. Thank you, Rahul.
(*For further information, the employee who has resigned is on probation and joined 6 months ago. Our company has a 1-year probation period.
From India, Delhi
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(*For further information, the employee who has resigned is on probation and joined 6 months ago. Our company has a 1-year probation period.
From India, Delhi
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Dear Rahul,
This all depends on the company's leave policy. In most organizations, while preparing the same, it is recorded as 7 days during the probation period, which lasts for 6 months. If one resigns during the aforementioned period, we ask for a 7-day notice. After serving the notice and accepting the resignation, while preparing the Full & Final settlement of the said employee, we do encash their remaining leaves from that period.
Regards,
Amit Seth.
From India, Ahmadabad
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This all depends on the company's leave policy. In most organizations, while preparing the same, it is recorded as 7 days during the probation period, which lasts for 6 months. If one resigns during the aforementioned period, we ask for a 7-day notice. After serving the notice and accepting the resignation, while preparing the Full & Final settlement of the said employee, we do encash their remaining leaves from that period.
Regards,
Amit Seth.
From India, Ahmadabad
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Hi,
I am an MBA-HR fresher and recently formulated a leave policy for my organization. My boss wants to deduct the salary of employees who are on probation, regardless of whether it is sanctioned or unsanctioned leave. However, I feel that even though an employee is on probation, their salary should not be deducted if they take leave.
I want to know if there is any law regarding this or if it totally depends on the employer.
Regards,
Purva
From India, Mumbai
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I am an MBA-HR fresher and recently formulated a leave policy for my organization. My boss wants to deduct the salary of employees who are on probation, regardless of whether it is sanctioned or unsanctioned leave. However, I feel that even though an employee is on probation, their salary should not be deducted if they take leave.
I want to know if there is any law regarding this or if it totally depends on the employer.
Regards,
Purva
From India, Mumbai
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Dear Rahul,
This question depends on the company's policy. It is also always mentioned in the company's Standing Orders. Normally, companies have a Leave Policy wherein employees are granted 7 CL, 7 SL, and 24 EL/PL. The probation period might be, let's say, 6 months.
In my personal experiences with 3-4 MNCs, the leave account may start from the date of joining; however, you can actually take that benefit after confirmation (when the probation period is over).
In your case, you are not supposed to pay anything with respect to leave to the employee unless your policy mentions anything on that part.
Regards, Shaunak Marulkar
From India, Mumbai
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This question depends on the company's policy. It is also always mentioned in the company's Standing Orders. Normally, companies have a Leave Policy wherein employees are granted 7 CL, 7 SL, and 24 EL/PL. The probation period might be, let's say, 6 months.
In my personal experiences with 3-4 MNCs, the leave account may start from the date of joining; however, you can actually take that benefit after confirmation (when the probation period is over).
In your case, you are not supposed to pay anything with respect to leave to the employee unless your policy mentions anything on that part.
Regards, Shaunak Marulkar
From India, Mumbai
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Dear Purva It depends on the company policy. Your company is not liable to pay for EL to any employee if he leaves in probation period. Regards Neetu
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If your company is registered under Shops * establishment Act/Factory Act - then the employee is entitled to get...refer law
From India, Hyderabad
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From India, Hyderabad
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Dear Rahul Verma,
Firstly, I would like to state that your organization will definitely be covered under the Shop & Estb. Act or Factories Act. Therefore, it is a statutory requirement to pay leave salary (Leave Encashment) at the time of making full and final payment to an employee, whether the employee is confirmed or on probation.
In most organizations, there may be a rule in their leave policy that a probationer is not entitled to avail earned leave. However, earned leave shall be credited to his or her leave account upon completion of one year (240 days or two-thirds of available days in a calendar year), which includes the probation period.
Thank you,
Mohd. Arif Khan
mak007hr@rediffmail.com
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Firstly, I would like to state that your organization will definitely be covered under the Shop & Estb. Act or Factories Act. Therefore, it is a statutory requirement to pay leave salary (Leave Encashment) at the time of making full and final payment to an employee, whether the employee is confirmed or on probation.
In most organizations, there may be a rule in their leave policy that a probationer is not entitled to avail earned leave. However, earned leave shall be credited to his or her leave account upon completion of one year (240 days or two-thirds of available days in a calendar year), which includes the probation period.
Thank you,
Mohd. Arif Khan
mak007hr@rediffmail.com
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Hi,
Usually, in many companies, employees are not entitled to any earned leave (EL) during their probation period. According to the law, a worker will be entitled to one day of EL for every 20 days of actual working, excluding Sundays and other holidays. To earn one day of EL, an employee must be physically present in the workplace for 20 days. For staff-level employees, the entitlement depends on the company's leave policy, with most companies granting 21 days of EL. Additionally, EL is only earned after completing the probation period.
Regards, Priya
From India, Bangalore
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Usually, in many companies, employees are not entitled to any earned leave (EL) during their probation period. According to the law, a worker will be entitled to one day of EL for every 20 days of actual working, excluding Sundays and other holidays. To earn one day of EL, an employee must be physically present in the workplace for 20 days. For staff-level employees, the entitlement depends on the company's leave policy, with most companies granting 21 days of EL. Additionally, EL is only earned after completing the probation period.
Regards, Priya
From India, Bangalore
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Hi Rahul,
The Factories Act clearly answers your question. An employee becomes eligible for EL/PL once he completes 12 months, which is calculated at the rate of one leave for every 20 days of mandays performed. In the event of resignation before completing one year, he becomes eligible to claim encashment of EL earned as per the above calculation. This is a mandatory rule that is applicable even during the probationary period.
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The Factories Act clearly answers your question. An employee becomes eligible for EL/PL once he completes 12 months, which is calculated at the rate of one leave for every 20 days of mandays performed. In the event of resignation before completing one year, he becomes eligible to claim encashment of EL earned as per the above calculation. This is a mandatory rule that is applicable even during the probationary period.
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Dear Purva,
Your boss is right. If an employee remains absent during the probation period, they are not entitled to any leave. If the employee is absent or on leave during probation, their salary is deducted for those number of days. This practice is followed in almost every organization.
Regards,
Nimish Joshi
From India, Mumbai
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Your boss is right. If an employee remains absent during the probation period, they are not entitled to any leave. If the employee is absent or on leave during probation, their salary is deducted for those number of days. This practice is followed in almost every organization.
Regards,
Nimish Joshi
From India, Mumbai
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Dear Purva,
I just want to add that if a company has the policy of granting CL/SL, then an employee becomes eligible to avail either Sick Leave or casual leave even during the probation period. Most companies deny leave only to temporary, casual, trainees category of employees. However, none of the above leaves are mandatory, and it is left to the discretion of the management. Only EL is mandatory as per law.
Regards,
Prashanth
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I just want to add that if a company has the policy of granting CL/SL, then an employee becomes eligible to avail either Sick Leave or casual leave even during the probation period. Most companies deny leave only to temporary, casual, trainees category of employees. However, none of the above leaves are mandatory, and it is left to the discretion of the management. Only EL is mandatory as per law.
Regards,
Prashanth
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Well, it is a point of debate, but it depends on the company's leave policy. Like in our company, we don't encash or give leaves to probationers. However, after confirmation, they can avail that right.
From United Kingdom
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From United Kingdom
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Dear Rahul,
As per the Factories Act, the employee is entitled to get the benefit of the privilege or earn leave if completes 240 working days in a year.
This is as per my knowledge. Seniors can guide me also.
Rahul
From India
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As per the Factories Act, the employee is entitled to get the benefit of the privilege or earn leave if completes 240 working days in a year.
This is as per my knowledge. Seniors can guide me also.
Rahul
From India
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In our co we have 5-CL’s, 5-SL’s n 12-PL’s And an employee cannot evil his PL’s still he completes his probation period (6 Mon). Regards, Venkat
From India, Hyderabad
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From India, Hyderabad
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Hi.
If the person leaves the organization even in the probation period, then he will be entitled to receive the EL encashment because at the time of full and final settlement, we have to show and deposit the PF amount at 12% on the EL encashment. Yes, the person cannot avail the EL even in the probation period or in the current calendar year. The total number of earned leaves will be credited in the next calendar month. The eligibility is 240 days when the person joins the organization on January 1st or, in another case, works 2/3 days in the remaining calendar year.
Regards,
Abhishek
From India, Delhi
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If the person leaves the organization even in the probation period, then he will be entitled to receive the EL encashment because at the time of full and final settlement, we have to show and deposit the PF amount at 12% on the EL encashment. Yes, the person cannot avail the EL even in the probation period or in the current calendar year. The total number of earned leaves will be credited in the next calendar month. The eligibility is 240 days when the person joins the organization on January 1st or, in another case, works 2/3 days in the remaining calendar year.
Regards,
Abhishek
From India, Delhi
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Hi Rahul,
According to the rule, you are supposed to pay for earned leave during the probation period. However, the employee should have completed the notice period. If not, then deduct from the notice period not served, and pay the remaining amount to the employee.
From India, Ahmadabad
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According to the rule, you are supposed to pay for earned leave during the probation period. However, the employee should have completed the notice period. If not, then deduct from the notice period not served, and pay the remaining amount to the employee.
From India, Ahmadabad
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Hi Rahul,
A lot many people have stated that the leave entitlement is based on the organization’s leave policy / standing orders; the argument is that the leave policy will also derive it from some where, and as we know it is either the Shops & Establishment Act or the Factories Act. Which means that it is a statutory requirement, as also stated by Arif.
If you go through both the acts, the leave entitlement part of the Shops & Establishment Act, seems to have been derived from Factories Act so it does not make a difference whether you are governed by Factories Act or the Shops & Establishment act, as far as the basis of leave rules is concerned, except for certain things.
Section 79 (1) of the Factories read as under
Every worker who has worked for a period of 240 days or more in the factory during a calendar year shall be allowed during the subsequent calendar year, leave with wages for the number of days calculated at the rate of -
Adult - 1 day for every 20 days of work performed by him during the previous calendar year
Child - 1 day for every 15 days of work performed by him during the previous calendar year
This actually means that during the first 240 days (typically the probation period) the law says no EL or PL (you may use any nomenclature as far as the definition satisfies annual leave with wages).
However, law always prescribes for a minimum benefit so if the organization decides to credit EL or PL on successful completion of the probation (on confirmation) the action is justified at the same time the reverse will be unlawful.
Further, Section 79 (3) of the Act states
If a worker is discharged or dismissed from services or quits his employment or is superannuated or dies while in service during the course of the calendar year, s/he or heir or nominee, as the case may be, shall be entitled to wages in lieu thereof .......
This is why encashment of the EL or PL is statutory; again the law does not stop from encashing CL or SL. In the case put up by you, since the person is under probation, which means he is yet to earn the EL or PL, there will be no encashment as per the act.
Normally in order to adjust the shortfall of the Notice Period we adjust unavailed PL or EL which is unlawful. Please refer Section 79 (12) of the Act which reads as
The unavailed leave of a worker shall not be taken into consideration in computing the period of any notice required to be given before discharge or dismissal.
In this case logically one should encash the EL or PL and recover the notice period, e.g.
EL - 20 days Shortfall of notice 15 days instead of encashing 5 days of EL encash 20 ELs and recover for 15 days shortfall, now this is lawful.
Hope this will be of some help.
Best wishes,
Sunil Joshi
PGCHRM - XLRI
From United States, Bedford
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A lot many people have stated that the leave entitlement is based on the organization’s leave policy / standing orders; the argument is that the leave policy will also derive it from some where, and as we know it is either the Shops & Establishment Act or the Factories Act. Which means that it is a statutory requirement, as also stated by Arif.
If you go through both the acts, the leave entitlement part of the Shops & Establishment Act, seems to have been derived from Factories Act so it does not make a difference whether you are governed by Factories Act or the Shops & Establishment act, as far as the basis of leave rules is concerned, except for certain things.
Section 79 (1) of the Factories read as under
Every worker who has worked for a period of 240 days or more in the factory during a calendar year shall be allowed during the subsequent calendar year, leave with wages for the number of days calculated at the rate of -
Adult - 1 day for every 20 days of work performed by him during the previous calendar year
Child - 1 day for every 15 days of work performed by him during the previous calendar year
This actually means that during the first 240 days (typically the probation period) the law says no EL or PL (you may use any nomenclature as far as the definition satisfies annual leave with wages).
However, law always prescribes for a minimum benefit so if the organization decides to credit EL or PL on successful completion of the probation (on confirmation) the action is justified at the same time the reverse will be unlawful.
Further, Section 79 (3) of the Act states
If a worker is discharged or dismissed from services or quits his employment or is superannuated or dies while in service during the course of the calendar year, s/he or heir or nominee, as the case may be, shall be entitled to wages in lieu thereof .......
This is why encashment of the EL or PL is statutory; again the law does not stop from encashing CL or SL. In the case put up by you, since the person is under probation, which means he is yet to earn the EL or PL, there will be no encashment as per the act.
Normally in order to adjust the shortfall of the Notice Period we adjust unavailed PL or EL which is unlawful. Please refer Section 79 (12) of the Act which reads as
The unavailed leave of a worker shall not be taken into consideration in computing the period of any notice required to be given before discharge or dismissal.
In this case logically one should encash the EL or PL and recover the notice period, e.g.
EL - 20 days Shortfall of notice 15 days instead of encashing 5 days of EL encash 20 ELs and recover for 15 days shortfall, now this is lawful.
Hope this will be of some help.
Best wishes,
Sunil Joshi
PGCHRM - XLRI
From United States, Bedford
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