To "leave" or not to "leave", is the question

When was the last time you took a leave from work and did not field at least one call from your colleagues or did not answer at least one ‘emergency’ WhatsApp text or mail?

Never, right?

It’s a very Indian (and South Asian) behavior to always be ‘on standby’ when it comes to work.

We rarely switch off, which severely impacts our work-life balance.

However, that might soon change!

A new clause in the Occupational Safety, Health, and Working Conditions Code Law mandates companies to compensate workers who have not claimed more than 30 days of leave.

There’s also a catch. A “worker” is defined as someone who has no managerial or supervisory role. The clause excludes “employees” who have managerial and supervisory roles from its ambit.

While employees, entrepreneurs, and solopreneurs cry in the corner, let’s look at what the policy entails.

Section 32(vii) of the new law allows a worker to carry forward a maximum of 30 days of annual leave to the subsequent calendar year. If the annual leave balance exceeds 30, then the employee will be entitled to encash the excess leave.

The law will have far-reaching consequences for both employees and workers.

Impact on Employers/Organizations:

  1. The law would increase the financial burden on honoring all payout requests for unused leaves, impacting their Sales, General, and Administrative expenses.

Our take: Companies might redistribute leaves among the different leave buckets and minimizing the number of paid leaves.

For example, some paid leaves may be reassigned to a block of unpaid mandatory leaves or well-being days. A few multinational organizations already have such leave buckets in place.

  1. In order to reduce the payouts for unused leaves, employers may encourage workers to take more leaves

Our take: Existing leave policies may be transformed to include mandatory block leaves/shut-down days. This will ensure compulsory leave usage by all the employees.

  1. Companies would tighten their record-keeping to track employees’ leaves, to ensure minimal leakage and wrongdoing.

Our take: This would need strong change management & governance mechanisms to be in place to ensure leaves are applied for, approved, and tracked properly in the HRMS.

  1. Improved work-life balance would potentially increase overall morale and productivity

Our take: Will that also mean better employee satisfaction and retention levels? Guess we’ll find out soon.

Impact on Workers:

  1. Push from employers/organizations to utilize leaves would potentially result in better work-life balance and job satisfaction.

Our take: Workers might be able to exercise better authority over their availability/accessibility during their leaves.

  1. Long-serving workers with a pile of unused leaves might be entitled to retroactive payouts under this clause.

Our take: It would be interesting to see how different organizations handle payouts. While employees might prefer a quarterly payout, the organizations might want to consider longer payout horizons.

While the exact dates for this law going into effect are still unclear, the passage of the law is definitely good news. It aligns India with global labor standards and emphasizes the importance of worker well-being and job security.

At a time when the working population looks for work-life balance, healthy work hours, and moving away from the grind, it remains to be seen how the actual aftereffects of the law will play out in major companies.

The India growth story would need a continuous, sustainable injection of skilled, committed workers into the workforce which will increasingly demand a healthy, equitable workplace.

This forward-looking law might just be the shot in the arm it needs!

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