Introduction: In India, navigating leave and labor laws is crucial for both employers and employees. Recent legislative changes have stirred conversations, particularly regarding leave entitlements and encashment policies. This article delves into the intricacies of these laws, offering comprehensive insights for stakeholders.
HERE ARE SOME THINGS YOU MUST KNOW….
The four new labour laws that are awaiting implementation which will introduce a lot of variations made for the both the employer and employees.
The major areas affected are as follows:
- Lower take-home pay.
- Higher contribution to the Employees’ Provident Fund (EPF) account.
- Calculation of number of paid leave.
- Maximum working hours in a week.
One of the labour laws –
The Occupational Safety, Health and Working Conditions Code – states that the accumulate paid leaves cannot exceed 30 days in a calendar year. If the accumulated paid leave due to an employee exceeds 30 days, the company (employer) will have to pay for the excess leave. In this case, ’employee’ here means those workers who are not in managerial or supervisory positions.
Parliament has already availed the approval for these 4 laws mentioned however the Occupational Safety, Health and Working Condition Code, Code on Wages are waiting for the effective date for implementation to be notified by the government.
“Section 32 of the Occupational Safety, Health and Working Conditions Code, 2020 (OSH Code) states following conditions with respect to availing annual leave, carry forward and encashment.
Section 32(vii) allows a worker to carry forward annual leave to a subsequent calendar year, maximum up to 30 days.
In case at the end of the calendar year the annual leave balance exceeds 30, then the employee will be entitled to encash the excess leave and carry forward 30 days to the next year.”
For Example: Mr A having 30 days of leave balance in the year 23-24 out of which he avails 20 leaves. Thus balance 10 leaves shall be carry forwarded in FY 24-25 however such transfer of leaves cannot exceed beyond 30 days, thus total leaves for FY 24-25 10+30 = 40 days
For which 30days can be carry forwarded in FY 25-26 & balance 10 days shall be will be encashed.
Types of General Leaves:
The specific leave policies for labourers can vary depending on factors such as the industry, type of employment, and state regulations. However, there are some common provisions and regulations that apply across the country:
Casual Leave: Casual leave is generally provided for short-term absences they can be for any personal reasons or emergencies. The number of casual leave days may vary from one organization to another.
Sick Leave: Sick leave is provided for when an employee is not able to work due to ill health or physical grievances. The number of sick leave and their conditions for availing for it are specified in labour laws or employment contracts however it may differ as per the HR policies of entities.
Earned/Privilege Leave: Earned leave, also known as honoured leave, are accumulated over a period of time worked by the employee. The polices regarding earned leaves are computed and availed as per labour leave laws or company concerned polices.
Maternity Leave: Maternity leave is provided to female employees for childbirth or adoption. Women employees of the organization are eligible for maternity leave and benefits as per the Maternity Benefit Amendment Act 2017.
The employee should have worked for at least 80days in the organisation in 12 months preceding the expected delivery date.
Medical Termination of Pregnancy or miscarriage is payable for 6 weeks/42days from the date of miscarriage.
In case of maternity: A woman employee can avail up to a maximum of 26 weeks at a time.
| Leaves (Weeks) | Number of Children |
| 26 weeks | Up to 2 |
| 12 weeks | More than 2 |
Paternity Leave: Some organizations may also provide paternity leave for male employees to support their partners during childbirth or adoption.
|
Leaves (Days) within 6 months of child’s birth |
Number of Children |
| 15 days | 1 |
| 30 days | More than 1 |
However, if not availed within 6 months from the date of birth such leaves shall be deemed to be lapsed.
Leave encashment – GOVERNMENT EMPLOYEES
Leave encashment allowed to the employee at the time of severance from the employer or at the time of retirement.
The maximum exemption limit is up to INR 25,00,000.
The exemption is calculated on the basis of following parameters that the minimum exemption amount considers. The following are the parameters:
- Leave Encashment amount.
- Threshold of 25,00,000 INR.
- Average Monthly Salary X Number of months
- Salary here includes Basic salary, Dearness allowance and Percentage of turnover basis commission.
NON-GOVERNMENT EMPLOYEES
The exemption is limited to the least of the following:
- Cash equivalent of unutilized earned leave (Max up to 30days)
- 10 months’ average salary based on an average salary of the last 10 months immediately preceding the severance.
- Threshold of 300,000 INR.
The balance amount after exemption will be taxed as per the tax limits.
i.e.
| Gross Leave Encashment Amount | XXX |
| Less: Exemption | (XX) |
| Balance Amount – Taxable | XXX |
Conclusion : Understanding leave and labor laws is indispensable for employers and employees in India. The evolving regulatory landscape necessitates vigilance and adaptation to ensure compliance and uphold employee welfare. By comprehensively analyzing recent legislative changes and longstanding provisions, stakeholders can navigate this terrain with confidence, fostering harmonious workplace dynamics.
This detailed article aims to provide a thorough understanding of leave and labor laws in India, catering to employers, employees, and legal professionals alike.
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Authors: Vanshika Gandhi, Associate Consultant | For Inquiries: Email [email protected] | Contact: +91 98709 25375, +91 99305 98581
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