Hi All,
Leaves are calculated based on the "CALENDAR YEAR" and not the "FINANCIAL YEAR"!!
I wanted to get better clarity on this. How does it make a difference? Are we violating the law if the leave period is from April to March instead of January to December? What is the best practice to follow to comply with the law?
[Link: https://www.citehr.com/436842-leave-calculation-financial-year-calendar-year.html]
Leave encashment is based on "BASIC" and not "GROSS" salary!!
We encash the remaining leaves based on Gross Salary. This is because when an employee takes paid leave, we make statutory deductions on Basic/Gross, depending on the case. Therefore, if an employee does not take leave, they are eligible for the entire Gross Pay, not just Basic.
This raises another question: I have heard that PF/ESIC contributions should be made on the amount of encashed leaves. Is this true? Is this the reason leave encashment is considered based on Basic salary?
[Link: https://www.citehr.com/443750-leave-encashment.html]
Generally, there are three types of leaves: Privilege/Earned Leave (PL/EL), Casual Leave (CL), and Sick Leave (SL). Among these, only PL can be carried forward or encashed at the end of the year, while the other two lapse. What if a company does not have these distinctions and only has one type, say CL, which they do not carry forward and must encash at the year-end? Would this be a violation of the law?
[Link: https://www.citehr.com/434860-leave-encashment-towards-full-final-settlement.html]
I am looking forward to clarity from seniors on all the three issues raised.
From India, Ahmedabad
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207Leaves are calculated based on the "CALENDAR YEAR" and not the "FINANCIAL YEAR"!!
I wanted to get better clarity on this. How does it make a difference? Are we violating the law if the leave period is from April to March instead of January to December? What is the best practice to follow to comply with the law?
[Link: https://www.citehr.com/436842-leave-calculation-financial-year-calendar-year.html]
Leave encashment is based on "BASIC" and not "GROSS" salary!!
We encash the remaining leaves based on Gross Salary. This is because when an employee takes paid leave, we make statutory deductions on Basic/Gross, depending on the case. Therefore, if an employee does not take leave, they are eligible for the entire Gross Pay, not just Basic.
This raises another question: I have heard that PF/ESIC contributions should be made on the amount of encashed leaves. Is this true? Is this the reason leave encashment is considered based on Basic salary?
[Link: https://www.citehr.com/443750-leave-encashment.html]
Generally, there are three types of leaves: Privilege/Earned Leave (PL/EL), Casual Leave (CL), and Sick Leave (SL). Among these, only PL can be carried forward or encashed at the end of the year, while the other two lapse. What if a company does not have these distinctions and only has one type, say CL, which they do not carry forward and must encash at the year-end? Would this be a violation of the law?
[Link: https://www.citehr.com/434860-leave-encashment-towards-full-final-settlement.html]
I am looking forward to clarity from seniors on all the three issues raised.
From India, Ahmedabad
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1. Leave Calculation for Financial Year
Law provides for calculation for the Calendar Year. However, there is no violation of the law if leave is calculated for the Financial year. It is the spirit of the law one should see. As long as you do not reduce the number, taking the year from April to March is perfectly alright. I have implemented this in one organization where I worked, and inspectors do not question this.
2. Leave Encashment on Basic
It has been the practice to pay encashment on Basic and DA alone. In those days, allowances normally include HRA, Conveyance, Washing allowance, etc. If a person takes leave, he has to stay in the same house. I have signed settlements for encashment indicating that Conveyance allowance, washing allowance, and HRA will not be included purely on the logic that these facilities are work-related. However, some organizations do pay all allowances now without applying any logic. I suggest organizations can draw their own conclusions on this by applying some logic suited to them. I still hold the view that logically there is no need to pay allowances like HRA, Conveyance, etc.
The Madras High Court has given a judgment saying that PF should be paid on leave encashment.
3. Having One Form of Leave
The Factories Act provides for Earned leave, and the Shops Act provides for Earned Leave and Medical leave as well. Earned Leave in all legislation needs to be carried forward. One cannot merge all leave and make it lapse at the end of the year even if the number is more.
From India, Chennai
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Law provides for calculation for the Calendar Year. However, there is no violation of the law if leave is calculated for the Financial year. It is the spirit of the law one should see. As long as you do not reduce the number, taking the year from April to March is perfectly alright. I have implemented this in one organization where I worked, and inspectors do not question this.
2. Leave Encashment on Basic
It has been the practice to pay encashment on Basic and DA alone. In those days, allowances normally include HRA, Conveyance, Washing allowance, etc. If a person takes leave, he has to stay in the same house. I have signed settlements for encashment indicating that Conveyance allowance, washing allowance, and HRA will not be included purely on the logic that these facilities are work-related. However, some organizations do pay all allowances now without applying any logic. I suggest organizations can draw their own conclusions on this by applying some logic suited to them. I still hold the view that logically there is no need to pay allowances like HRA, Conveyance, etc.
The Madras High Court has given a judgment saying that PF should be paid on leave encashment.
3. Having One Form of Leave
The Factories Act provides for Earned leave, and the Shops Act provides for Earned Leave and Medical leave as well. Earned Leave in all legislation needs to be carried forward. One cannot merge all leave and make it lapse at the end of the year even if the number is more.
From India, Chennai
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Dear All,
Can anyone guide me to learn about the paternity leave policy in Indian organizations? How many days are ideally allowed for the same?
Awaiting your valuable guidance.
Regards,
Ambreen Shaikh
HR Executive
From India, Pune
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Can anyone guide me to learn about the paternity leave policy in Indian organizations? How many days are ideally allowed for the same?
Awaiting your valuable guidance.
Regards,
Ambreen Shaikh
HR Executive
From India, Pune
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Indian companies do not provide paternity leave. It is not mandated by law either. In fact, asking for such leave is likely to be viewed negatively in your career plan. Of course, if you have accumulated leave, you can use that in such a case, and no one will object.
From India, Mumbai
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From India, Mumbai
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Hi,
I fully agree with our member Mr. Sivasankaran. This is a perfect and complete clarification. Nothing more to add. However, we have a practice of encashing the full salary (including HRA & Conveyance) as leave encashment only at the time an employee retires from the services of our organization. Of course, this is a good gesture from our management to employees. We also can keep/carry forward 90 days of PL/EL to the credit.
From India, Ahmadabad
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I fully agree with our member Mr. Sivasankaran. This is a perfect and complete clarification. Nothing more to add. However, we have a practice of encashing the full salary (including HRA & Conveyance) as leave encashment only at the time an employee retires from the services of our organization. Of course, this is a good gesture from our management to employees. We also can keep/carry forward 90 days of PL/EL to the credit.
From India, Ahmadabad
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Dear Hiral,
I am working in a central PSU (A LEADING PSU). We can accumulate P/L and S/L up to 120 days and 300 days respectively. I do not agree with what Saswata Banerjee says because we DO HAVE a Paternity leave of 15 days in our organization. The same was started some 10 years ago.
S.K. Limaye (MBA-HRM)
From India, New Delhi
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I am working in a central PSU (A LEADING PSU). We can accumulate P/L and S/L up to 120 days and 300 days respectively. I do not agree with what Saswata Banerjee says because we DO HAVE a Paternity leave of 15 days in our organization. The same was started some 10 years ago.
S.K. Limaye (MBA-HRM)
From India, New Delhi
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Dear Hiral, One more thing.PL is credited for 30days and CL for 10days on 1stApril every year.S/L is credited for 10days on the 1stJanuary every year !
From India, New Delhi
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From India, New Delhi
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Paternity leave is now being offered by most companies as benefit which is not mandatory. This leave normally ranges from 3-7days for the individual.
From India, Bangalore
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From India, Bangalore
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Hello!
Thank you all for your remarks and comments.
While on the same lines, I would like to ask what if an employee has been on leave for a month due to an accident and has been advised bed rest, with ESIC being taken care of by the company. The employee is expected to be on leave for the next two months or so. In such a case, is he eligible for PL, CL, SL? It is important to note that the employee, in general, is eligible for 1.5 leave credits every month.
Advice is solicited.
From India, Ahmedabad
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Thank you all for your remarks and comments.
While on the same lines, I would like to ask what if an employee has been on leave for a month due to an accident and has been advised bed rest, with ESIC being taken care of by the company. The employee is expected to be on leave for the next two months or so. In such a case, is he eligible for PL, CL, SL? It is important to note that the employee, in general, is eligible for 1.5 leave credits every month.
Advice is solicited.
From India, Ahmedabad
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Leave Encashment Policy.pdf
Leave Policy.doc