Dear all,
Please help me find a solution for this. So far, I have not found any relevant posts on this issue. The company has issued appointment letters with different terms and conditions for different employees. For example, one employee was given 20 earned leaves per year, while another was given 30 earned leaves per year.
I am considering implementing a policy where all employees receive only 25 earned leaves per year. I am concerned about the legality of this decision. If I proceed with this change, how appropriate would it be from a legal standpoint?
Changing the leave policy in this way may lead to questions from employees who were originally entitled to 30 earned leaves. They may inquire about the basis for reducing their entitled leaves after it was specified in their terms and conditions.
Please advise me on how to address this potentially serious issue. :(
Thank you.
From India, Delhi
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23Please help me find a solution for this. So far, I have not found any relevant posts on this issue. The company has issued appointment letters with different terms and conditions for different employees. For example, one employee was given 20 earned leaves per year, while another was given 30 earned leaves per year.
I am considering implementing a policy where all employees receive only 25 earned leaves per year. I am concerned about the legality of this decision. If I proceed with this change, how appropriate would it be from a legal standpoint?
Changing the leave policy in this way may lead to questions from employees who were originally entitled to 30 earned leaves. They may inquire about the basis for reducing their entitled leaves after it was specified in their terms and conditions.
Please advise me on how to address this potentially serious issue. :(
Thank you.
From India, Delhi
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Vishal,
You can definitely harmonize the policy. The company has the right to change the rules and regulations as per business needs and bring parity among employees. There are no legal consequences for this. Please follow the procedure as outlined below:
1) Make a list of employees who will benefit. In any case, they will be happy.
2) Make a list of employees who will lose the benefits (5 days). You have to manage this with proper communication and by adding a one-time settlement in salary (for example, deducting 5 days' salary from their yearly CTC. For instance, if the gross salary is 300,000/- then 3 lakh divided by 365 multiplied by 5 days is equal to 4,110/- per annum, so their new gross will be 304,110/- per annum). However, you are not obligated to compensate, but as a good practice and to maintain positivity, you can do this.
Furthermore, you have to ensure proper and transparent communication with justifications. You can also mention the benchmarking with other industries as a reason.
Regards,
From India, Pune
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You can definitely harmonize the policy. The company has the right to change the rules and regulations as per business needs and bring parity among employees. There are no legal consequences for this. Please follow the procedure as outlined below:
1) Make a list of employees who will benefit. In any case, they will be happy.
2) Make a list of employees who will lose the benefits (5 days). You have to manage this with proper communication and by adding a one-time settlement in salary (for example, deducting 5 days' salary from their yearly CTC. For instance, if the gross salary is 300,000/- then 3 lakh divided by 365 multiplied by 5 days is equal to 4,110/- per annum, so their new gross will be 304,110/- per annum). However, you are not obligated to compensate, but as a good practice and to maintain positivity, you can do this.
Furthermore, you have to ensure proper and transparent communication with justifications. You can also mention the benchmarking with other industries as a reason.
Regards,
From India, Pune
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Dear, Good solution given by Mr. Vinod Bidwaik. I agree with this solution. Kiran Arya Executive-HR Printman Associates(P) Ltd.
From India, Delhi
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From India, Delhi
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Mr. Vinod,
Thanks for your valuable response. Can you please guide me on what ways I can convince them?
Some of the employees may start criticizing management for reducing their annual leave. So, what sort of justification can be given to them? Please let me know about it as well.
:-!
From India, Delhi
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Thanks for your valuable response. Can you please guide me on what ways I can convince them?
Some of the employees may start criticizing management for reducing their annual leave. So, what sort of justification can be given to them? Please let me know about it as well.
:-!
From India, Delhi
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Hi Vishal,
You can make the presentation on the same. Why are you changing the policy? What changes are you making? What will be the benefits for gainers? Benefits for losers will be a gross salary increase, further increments will be on additional salary in the future, benefits in PF and gratuity, etc. You have to craft a positive story. Also, mention that the company is not reducing the benefits; in fact, it is adding to the salary, so the company is fair.
Regards,
Vinod Bidwaik
From India, Pune
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You can make the presentation on the same. Why are you changing the policy? What changes are you making? What will be the benefits for gainers? Benefits for losers will be a gross salary increase, further increments will be on additional salary in the future, benefits in PF and gratuity, etc. You have to craft a positive story. Also, mention that the company is not reducing the benefits; in fact, it is adding to the salary, so the company is fair.
Regards,
Vinod Bidwaik
From India, Pune
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Vishal,
Each person is unique; you cannot use the same key for every lock. However, given that you are looking for some tricks to convince them, try explaining to them that in order to bring harmony and fair treatment to each employee, the company has decided to provide the same number of leaves to all employees. Explain to them how important it is to be treated fairly. Also, tell them how they would feel if they were not given some privileges that other employees have.
Again, convincing them is all up to you; there are no magic tricks. You just need to understand what they want to hear and tell them exactly the same.
All the Best,
Cheers!!
Sagar Gulani
From India, Surat
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Each person is unique; you cannot use the same key for every lock. However, given that you are looking for some tricks to convince them, try explaining to them that in order to bring harmony and fair treatment to each employee, the company has decided to provide the same number of leaves to all employees. Explain to them how important it is to be treated fairly. Also, tell them how they would feel if they were not given some privileges that other employees have.
Again, convincing them is all up to you; there are no magic tricks. You just need to understand what they want to hear and tell them exactly the same.
All the Best,
Cheers!!
Sagar Gulani
From India, Surat
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Vinod Ji,
If I consider your suggestion, there may be some obstacles from the management side. They may not be willing to increase their CTC in lieu of reducing the number of leaves since it would affect other things like liability towards gratuity, bonus, etc. claims.
In your first post, you are asking to make only a one-time payment. But in the second post, indirectly, you are asking to make increased salary payments every year.
Please make me clear on this!
From India, Delhi
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If I consider your suggestion, there may be some obstacles from the management side. They may not be willing to increase their CTC in lieu of reducing the number of leaves since it would affect other things like liability towards gratuity, bonus, etc. claims.
In your first post, you are asking to make only a one-time payment. But in the second post, indirectly, you are asking to make increased salary payments every year.
Please make me clear on this!
From India, Delhi
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It is not increased payment. If the leave is adjusted one time, the employee may get future benefits like an increased annual base salary. This is showing the benefits to employees.
However, if your management is not willing to do that, it is a management issue. Management is expected to be fair in such cases. You can still reduce the leave without compensation, but is taking the benefits your objective or is harmonization your objective?
You will end up dissatisfying your employee, and employees are smart. They will remember this and definitely take care in the future. HR should be sensitive.
Regards,
From India, Pune
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However, if your management is not willing to do that, it is a management issue. Management is expected to be fair in such cases. You can still reduce the leave without compensation, but is taking the benefits your objective or is harmonization your objective?
You will end up dissatisfying your employee, and employees are smart. They will remember this and definitely take care in the future. HR should be sensitive.
Regards,
From India, Pune
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Increasing the CTC is not possible practically. You can give 5 special leaves to employees who accumulate 25 earned leaves on behalf of management in a year. This will help avoid confusion between those employees who acquire 30 earned leaves. However, increasing the CTC may raise objections from other employees in the same organization.
If my viewpoint is not acceptable, please reply back.
From India, Delhi
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If my viewpoint is not acceptable, please reply back.
From India, Delhi
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Good morning,
I appreciate both the suggestions given by Mr. Vinod and Mr. Sanjeev. I will discuss the same with the management and will work towards a solution that is favorable for both employees and the company.
Thank you all for your kind cooperation.
From India, Delhi
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I appreciate both the suggestions given by Mr. Vinod and Mr. Sanjeev. I will discuss the same with the management and will work towards a solution that is favorable for both employees and the company.
Thank you all for your kind cooperation.
From India, Delhi
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It is common practice that people with different Terms & Conditions of service are entitled to different days of leave. You have people governed by Standing Orders; people governed under Conduct, Discipline & Appeal Rules and other Service Rules. Their working hours, Closed Holidays, and remunerations are different.
To bring all the employees under the same leave rules, you have to change their remunerations and working hours, etc. Thank you.
From India, Bokaro
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To bring all the employees under the same leave rules, you have to change their remunerations and working hours, etc. Thank you.
From India, Bokaro
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Dear all,
It is called earned leave and not gifted by your company to anyone. Earned means an employee earning the leave from his practical previous working days which will be credited to his account every year. This should be calculated based on his physical attendance/working days, leaving out any holidays including Sundays. For example, on average, if the employee works more than 240 days, he is eligible for earned leave (leaving Sundays 52, and his CL 10 days if he utilized and also less his other leave of absence which includes EL, ML, and LOP, etc.
Here is the Factories Act Rules on earned leave: And no company can put its hand on this... Rule is Rule... more than this leave Company Management can give consideration if any employee has gone on leave more than the limit. But The Company cannot declare that one employee gets 25 days EL and another employee 15 days or 20 or so... If one employee goes to labor court, the company may escape and the HR Manager will be in soup... be careful.
79. Annual leave with wages
(1) Every worker who has worked for a period of 240 days or more in a factory during a calendar year shall be allowed during the subsequent calendar year, leave with wages for a number of days calculated at the rate of:
- if an adult, one day for every twenty days of work performed by him during the previous calendar year;
- if a child, one day for every fifteen days of work performed by him during the previous calendar year.
Explanation 1: For the purposes of this subsection:
- any days of lay-off; by agreement or contract or as permissible under the standing orders;
- in the case of a female worker, maternity leave for any number of days not exceeding twelve weeks; and
- the leave earned in the year prior to that in which the leave is enjoyed; shall be deemed to be days on which the worker has worked in a factory for the purpose of computation of the period of 240 days or more, but he shall not earn leave for these days.
Explanation 2: The leave admissible under this subsection shall be exclusive of all holidays whether occurring during or at either end of the period of leave.
(2) A worker whose service commences otherwise than on the first day of January shall be entitled to leave with wages at the rate laid in clause (i) or, as the case may be, clause (ii) of subsection (1) if he has worked for two-thirds of the total number of days in the remainder of the calendar year.
(3) If a worker is discharged or dismissed from service or quits his employment or is superannuated or dies while in service during the course of the calendar year, he or his heir or nominee, as the case may be, shall be entitled to wages in lieu of the quantum of leave to which he was entitled immediately before the discharge, dismissal, quitting of employment, superannuation, or death calculated at the rates specified in subsection (1), even if he had not worked for the entire period specified in subsection (1) or subsection (2) making him eligible to avail of such leave, and such payment shall be made:
- where the worker is discharged or dismissed or quits employment, before the expiry of the second working day from the date of such discharge, dismissal, or quitting; and
- where the worker is superannuated or dies while in service, before the expiry of two months from the date of such superannuating or death.
(4) In calculating leave under this section, a fraction of leave of half a day or more shall be treated as one full day's leave and a fraction of less than a half a day shall be omitted.
(5) If a worker does not in any one calendar year take the whole of the leave allowed to him under subsection (1) or subsection (2), as the case may be, any leave not taken by him shall be added to the leave to be allowed to him in the succeeding calendar year:
Provided that the total number of days of leave that may be carried forward to a succeeding year shall not exceed thirty in the case of an adult or forty in the case of a child:
Provided further that a worker who has applied for leave with wages but has not been given such leave in accordance with any scheme laid down in subsections (8) and (9) or in contravention of subsection (10) shall be entitled to carry forward the leave refused without any limit.
(6) A worker may at any time apply in writing to the manager of a factory not less than fifteen days before the date on which he wishes his leave to begin, to take all the leave or any portion thereof allowable to him during the calendar year:
Provided that the application shall be made not less than thirty days before the date on which the worker wishes his leave to begin if he is employed in a public utility service as defined in clause (n) of section 2 of the Industrial Disputes Act, 1947 (XIV of 1947):
Provided further that the number of times in which leave may be taken during any year shall not exceed three.
(7) If a worker wants to avail himself of the leave with wages due to him to cover a period of illness, he shall be granted such leave even if the application for leave is not made within the time specified in subsection (6); and in such a case, wages as admissible under section 81 shall be paid not later than fifteen days, or in the case of a public utility service not later than thirty days from the date of the application for leave.
(8) For the purpose of ensuring the continuity of work, the occupier or manager of the factory, in agreement with the Works Committee of the factory constituted under section 3 of the Industrial Disputed Act, 1947 (XIV of 1947), or a similar Committee under any other Act or if there is no such Works Committee or a similar Committee in the factory, in agreement with the representatives of the workers therein chosen in the prescribed manner, may lodge with the Chief Inspector a scheme in writing whereby the grant of the leave allowable under this section may be regulated.
(9) A scheme lodged under subsection (8) shall be displayed at some conspicuous and convenient places in the factory and shall be in force for a period of twelve months from the date on which it comes into force, and may thereafter be renewed with or without modification for a further period of twelve months at a time, by the manager in agreement with the Works Committee or a similar Committee, or as the case may be, in agreement with the representatives of the workers as specified in subsection (8), and a notice of renewal shall be sent to the Chief Inspector before it is renewed.
(10) An application for leave that does not contravene the provisions of subsection (6) shall not be refused unless the refusal is in accordance with the scheme for the time being in operation under subsections (8) and (9).
(11) If the employment of a worker who is entitled to leave under subsection (1) or subsection (2), as the case may be, is terminated by the occupier before he has taken the entire leave to which he is entitled, or if having applied for and having not been granted such leave, the worker quits his employment before he has taken the leave, the occupier of the factory shall pay him the amount payable under section 80 in respect of the leave not taken, and such payment shall be made where the employment of the worker is terminated by the occupier, before the expiry of the second working day after such termination, and where a worker who quits his employment, on or before the next payday.
(12) 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.
From India, Bangalore
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It is called earned leave and not gifted by your company to anyone. Earned means an employee earning the leave from his practical previous working days which will be credited to his account every year. This should be calculated based on his physical attendance/working days, leaving out any holidays including Sundays. For example, on average, if the employee works more than 240 days, he is eligible for earned leave (leaving Sundays 52, and his CL 10 days if he utilized and also less his other leave of absence which includes EL, ML, and LOP, etc.
Here is the Factories Act Rules on earned leave: And no company can put its hand on this... Rule is Rule... more than this leave Company Management can give consideration if any employee has gone on leave more than the limit. But The Company cannot declare that one employee gets 25 days EL and another employee 15 days or 20 or so... If one employee goes to labor court, the company may escape and the HR Manager will be in soup... be careful.
79. Annual leave with wages
(1) Every worker who has worked for a period of 240 days or more in a factory during a calendar year shall be allowed during the subsequent calendar year, leave with wages for a number of days calculated at the rate of:
- if an adult, one day for every twenty days of work performed by him during the previous calendar year;
- if a child, one day for every fifteen days of work performed by him during the previous calendar year.
Explanation 1: For the purposes of this subsection:
- any days of lay-off; by agreement or contract or as permissible under the standing orders;
- in the case of a female worker, maternity leave for any number of days not exceeding twelve weeks; and
- the leave earned in the year prior to that in which the leave is enjoyed; shall be deemed to be days on which the worker has worked in a factory for the purpose of computation of the period of 240 days or more, but he shall not earn leave for these days.
Explanation 2: The leave admissible under this subsection shall be exclusive of all holidays whether occurring during or at either end of the period of leave.
(2) A worker whose service commences otherwise than on the first day of January shall be entitled to leave with wages at the rate laid in clause (i) or, as the case may be, clause (ii) of subsection (1) if he has worked for two-thirds of the total number of days in the remainder of the calendar year.
(3) If a worker is discharged or dismissed from service or quits his employment or is superannuated or dies while in service during the course of the calendar year, he or his heir or nominee, as the case may be, shall be entitled to wages in lieu of the quantum of leave to which he was entitled immediately before the discharge, dismissal, quitting of employment, superannuation, or death calculated at the rates specified in subsection (1), even if he had not worked for the entire period specified in subsection (1) or subsection (2) making him eligible to avail of such leave, and such payment shall be made:
- where the worker is discharged or dismissed or quits employment, before the expiry of the second working day from the date of such discharge, dismissal, or quitting; and
- where the worker is superannuated or dies while in service, before the expiry of two months from the date of such superannuating or death.
(4) In calculating leave under this section, a fraction of leave of half a day or more shall be treated as one full day's leave and a fraction of less than a half a day shall be omitted.
(5) If a worker does not in any one calendar year take the whole of the leave allowed to him under subsection (1) or subsection (2), as the case may be, any leave not taken by him shall be added to the leave to be allowed to him in the succeeding calendar year:
Provided that the total number of days of leave that may be carried forward to a succeeding year shall not exceed thirty in the case of an adult or forty in the case of a child:
Provided further that a worker who has applied for leave with wages but has not been given such leave in accordance with any scheme laid down in subsections (8) and (9) or in contravention of subsection (10) shall be entitled to carry forward the leave refused without any limit.
(6) A worker may at any time apply in writing to the manager of a factory not less than fifteen days before the date on which he wishes his leave to begin, to take all the leave or any portion thereof allowable to him during the calendar year:
Provided that the application shall be made not less than thirty days before the date on which the worker wishes his leave to begin if he is employed in a public utility service as defined in clause (n) of section 2 of the Industrial Disputes Act, 1947 (XIV of 1947):
Provided further that the number of times in which leave may be taken during any year shall not exceed three.
(7) If a worker wants to avail himself of the leave with wages due to him to cover a period of illness, he shall be granted such leave even if the application for leave is not made within the time specified in subsection (6); and in such a case, wages as admissible under section 81 shall be paid not later than fifteen days, or in the case of a public utility service not later than thirty days from the date of the application for leave.
(8) For the purpose of ensuring the continuity of work, the occupier or manager of the factory, in agreement with the Works Committee of the factory constituted under section 3 of the Industrial Disputed Act, 1947 (XIV of 1947), or a similar Committee under any other Act or if there is no such Works Committee or a similar Committee in the factory, in agreement with the representatives of the workers therein chosen in the prescribed manner, may lodge with the Chief Inspector a scheme in writing whereby the grant of the leave allowable under this section may be regulated.
(9) A scheme lodged under subsection (8) shall be displayed at some conspicuous and convenient places in the factory and shall be in force for a period of twelve months from the date on which it comes into force, and may thereafter be renewed with or without modification for a further period of twelve months at a time, by the manager in agreement with the Works Committee or a similar Committee, or as the case may be, in agreement with the representatives of the workers as specified in subsection (8), and a notice of renewal shall be sent to the Chief Inspector before it is renewed.
(10) An application for leave that does not contravene the provisions of subsection (6) shall not be refused unless the refusal is in accordance with the scheme for the time being in operation under subsections (8) and (9).
(11) If the employment of a worker who is entitled to leave under subsection (1) or subsection (2), as the case may be, is terminated by the occupier before he has taken the entire leave to which he is entitled, or if having applied for and having not been granted such leave, the worker quits his employment before he has taken the leave, the occupier of the factory shall pay him the amount payable under section 80 in respect of the leave not taken, and such payment shall be made where the employment of the worker is terminated by the occupier, before the expiry of the second working day after such termination, and where a worker who quits his employment, on or before the next payday.
(12) 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.
From India, Bangalore
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Dear Vishal,
1. You cannot change the terms and conditions of the appointment letter without a valid reason or without the consent of the person concerned. It would be illegal and unfair practice.
2. Formulate and introduce a new leave policy with different categories.
3. I am enclosing the leave policy herewith for your reference.
From India, New Delhi
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1. You cannot change the terms and conditions of the appointment letter without a valid reason or without the consent of the person concerned. It would be illegal and unfair practice.
2. Formulate and introduce a new leave policy with different categories.
3. I am enclosing the leave policy herewith for your reference.
From India, New Delhi
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Mr. Satya,
As far as I feel, the minimum PLs as defined by law should be provided by the company. In case management is currently granting more leave than required and now wishes to reduce this allocation, it would depend on management's discretion. However, the company cannot reduce the PL entitlement below the legally defined minimum. As suggested by Mr. Vinod, employees may be compensated on humanitarian grounds, but this is not mandatory.
Further comments are welcomed.
From India, Delhi
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As far as I feel, the minimum PLs as defined by law should be provided by the company. In case management is currently granting more leave than required and now wishes to reduce this allocation, it would depend on management's discretion. However, the company cannot reduce the PL entitlement below the legally defined minimum. As suggested by Mr. Vinod, employees may be compensated on humanitarian grounds, but this is not mandatory.
Further comments are welcomed.
From India, Delhi
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Vinod's solution is appreciated. However, your objective is to bring uniformity in service conditions relating to leave among all employees. If you implement the solution, you are reducing leave on one hand but compensating them by paying them proportionately every year, thus retaining a distinction between the two classes of employees in another form. This increase in salary may have a cascading effect on P.F, ESI contributions, on gratuity and bonus, as well as leave encashment. Thus, in the long run, the benefit quotient of these employees may be far ahead of those who have lesser leave. This is not, in real terms, uniformity. I am not going into the legality of the reduction of one's leave arbitrarily, given the limited details. If such unilateral reduction is permissible and for the sake of harmony, you can grant such a pay increase as ex gratia for one year and thereafter withdraw it so that the extra benefit in the form of pay increase will not be recurring every year.
B. Saikumar
HR & Labour Law Advisor
Mumbai
From India, Mumbai
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B. Saikumar
HR & Labour Law Advisor
Mumbai
From India, Mumbai
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(Fact Checked)-The user's reply is accurate and provides insightful information on the potential implications of changing the leave policy. Well done! (1 Acknowledge point)
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Top management has full rights to view and implement the policies. Not necessarily all policies shall be standardized for all categories of employees. As the responsibility increases, facilities may also increase depending upon the situation. Also, much depends on the attitude of top management.
Some companies give five days working to their office staff and six days working to factory employees with an eight-hour daily shift.
Some provide twice the wages for overtime to one category of employees, compensatory time off to others, and no extra benefits to executive employees.
Some adhere to the minimum wage as per the act, while others are more liberal with wages.
There is no comparison on the above issues.
HR executives should think on broader lines to attract talent to work in their companies. Employees should not leave over minor issues; they should consider the company's benefits and productivity. Employees should feel proud of their company and its policies.
As an HR executive, if one category is receiving less, take pride in increasing their benefits to earn the appreciation of all employees but only after obtaining approval from top management. Cutting benefits for any category will not lead to employee satisfaction.
From India, Delhi
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Some companies give five days working to their office staff and six days working to factory employees with an eight-hour daily shift.
Some provide twice the wages for overtime to one category of employees, compensatory time off to others, and no extra benefits to executive employees.
Some adhere to the minimum wage as per the act, while others are more liberal with wages.
There is no comparison on the above issues.
HR executives should think on broader lines to attract talent to work in their companies. Employees should not leave over minor issues; they should consider the company's benefits and productivity. Employees should feel proud of their company and its policies.
As an HR executive, if one category is receiving less, take pride in increasing their benefits to earn the appreciation of all employees but only after obtaining approval from top management. Cutting benefits for any category will not lead to employee satisfaction.
From India, Delhi
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The better option seems to be what Mr.Mathur suggested i.e by bringing the leave entitlement of those with lesser leave on par with those with higher leave entitlement. B.Saikumar Mumbai
From India, Mumbai
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From India, Mumbai
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Dear All, May be we also need understand reason for two type in first place.This will help make decision for if should change it or not and if yes,explanation to affected employee. Regards / satish
From India
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CiteHR.AI
(Fact Checked)-The user's reply contains accurate information regarding earned leave entitlement as per the Factories Act. The explanation provided aligns with the legal provisions stated in the Act. (1 Acknowledge point)