Calculation of Earned Leave

Hi team,

As per our company policy, we grant 12 Earned Leaves per year to employees who complete 1 year with us. So, if an employee completes his year in Oct 2020, then will he get ELs for 2020 or will they start from 2021? If he is eligible to get in 2020, then how will be the calculation? Will it be only 2 leaves for the year 2020? Or irrespective of the month of completion, he will get 12 leaves in 2020?

Request you to kindly share some insights on this.

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Hi @Mugdhavn13

Firstly, Paid Leaves or Earned Leaves are as per the Bombay Shops & Establishment Act, every worker who has worked for a period of 240 days or more in a calendar year shall be allowed paid leave for a number of days calculated at the rate of one day for every twenty days of work performed during the previous year.

So 12 earned leave post completion of 1 year of Service is not adhering to statues. You need to give it basis

1 Leave for every 20 Days worked in previous year

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Hi @Mugdhavn13

This is slightly tricky.

Leaves are granted once in a year or monthly. Since here the concept is Yearly - it should be granted as & when an employees completes the year.

In greytHR you have the provision to do so, based on year of completion this can be automated.

Answering to your query - Yes! he has to be given. You can also prorate this and give once in the beginning of every year or at the end.

Example: Till oct no leave but from Oct to next year completion 12 can be given.

This entire process can also be automated.

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I think Mugdha’s concern is more in to the operational complexities. If employees are joining in between, no need to wait for his/her one year completion to credit leave is my thought. Monthly grant can be operationally convenient (probably once the employee is confirmed) and instead of having a bulk credit of 12 or 18 days on completion of 240 days of continuous service, let it go to employee’s account on a monthly basis. For employee, this can give some happiness and for employer no burden of allowing employee to take a week’s vacation. To cover up the glitch that employee may avail all leaves and resign before completion of one year, management could add a clause in the exit terms that company may roll back earned leaves which are credited as a privilege and used up before the completion of one year. @Chethanbn could suggest the most preferred customers practice

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Practise of granting earned leaves is annual (calender year). Check for 240 days. Maximum leaves per year is 15 … one day for every 15 days and 20 days for non adult and adult workers respectively
Factories act - 1day for 20 working days (max - 15)
Shops and estbalishment act - 5 days for every 4 months (max - 15)

whether you want to give leaves for those two months or give a fresh grant in January is upto your company policy. Pro rate basis will help in employee satisfaction. To the best of my knowledge there is no hard and fast rule regarding this subject

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@Ankit thank you for your reply. I will surely check with the internal team and do the needful to make sure our policy is aligned with the statutory norms.

@Dinesh yes, you are right this is a little tricky. Thank you for your insght though :slight_smile:

@Sree As you rightly identified, I wanted to highlight the operational challenge that we are facing currently. Thank you for mentioning it. I will definitely look into your suggestion.

@Bharath Thanks for your reply. Will check what policy suits best for our organization.

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