Leaves & Holidays under Indian Labour & Employment Laws

Holidays and Leaves of workers in India are governed principally by the Factory Act, 1948 and state shops and establishment acts.

Weekend Holidays

Mr. Pankaj Singla
Sr. Associate
+919971508320
pankaj@indiacp.com
In India, the law prescribes maximum number of hours a week a worker may not be employed beyond. An adult worker shall not be employed for more than 48 (forty eight) hours in a week and not more than 9 (nine) hours in a day. Weekly holiday is compulsory as per the Factories Act. First day of the week i.e. Sunday shall be a weekly holiday. The employer has to make sure that no worker works more than 10 days without a rest day of 24 hours. Therefore, if the worker is asked to work on weekly
holiday, he should have full holiday on one of three days immediately or after the normal day of holiday. Accordingly, the weekly holiday i.e. at least one full day holiday every week may be changed from Sunday to other days of a week by following the procedure laid down under section 52 of the Factories Act, 1948, which requires delivery of a notice to the local labour inspector before making such changes in the weekly holidays.
Similar provisions have been adopted under the shops and establishment acts of various states in India.

National Holidays

Every state government is empowered to declare national, festival and other mandatory holidays for industrial establishments under their respective Industrial Establishment Acts, e.g. Delhi has adopted The Punjab Industrial Establishment (National and Festival Holidays and Casual and Sick Leave) Act, 1965 whereby ever worker shall is entitled to the following mandatory holidays in each calendar year:

(a)Three national holidays of one whole day each on the 26th January, 15th August and 2nd October; and

(b) four other festival holidays.

On the similar note, state governments under their respective shops and establishment acts may declare mandatory national and other holidays for non-factory workers e.g., Delhi Shops & Establishment Act, 1954 mandates three national holidays of one whole day each on the 26th January, 15th August and 2nd October.

Leaves for Factory Workers

Every worker who has worked in a factory for a period of 240 days or more in a year is entitled to leaves with wages in the subsequent year at the rate of one (1) leave for every twenty (20) days of work performed by him during the previous year. However, a non-adult person working is entitled to leaves at the rate of one (1) leave for every 15 days of work performed during the previous year.

It has been clarified that the above-mentioned leaves are exclusive of all other holidays whether occurring during or at end of period of leave.10 Therefore, any holidays occurring during, immediately before or after the period of leave under section 79(1) shall be excluded while counting the leaves a worker is entitled to.

A worker who was employed in the factory on the first day of January of a year and has worked for two third of the total number of days in a year, he shall be entitled to the leaves during the remainder of the calendar year.

Leaves for non-factory workers

Provisions similar to that of the Factories Act, 1948 have been adopted under the Shops and Establishment acts of various states in India. For example, Delhi Shops and Establishments Act, 1954 mandates that every person employed in an establishment is entitled to:

i. privilege leave for a period of not less than 15 days, after every twelve months of continuous employment; and

ii. casual or sick leave for a total period of not less than 12 days every year.

An employee becomes entitled to a minimum of 5 days of privilege leave for every four months of continuous employment and a minimum of 1 day casual leave upon completion of every month at work.

Procedure for compensation for leaves 

A worker who is discharged, dismissed or quits employment is entitled to avail wages in lieu of the leaves to which he was entitled immediately before such discharge, dismissal or resignation. The Factories Act also lays down strict deadlines for making payment of wages in lieu of the leaves.

Similar to the provisions of the Factories Act, an employee entitled to privilege leave is entitled to leave encashment at the time of leaving the job. However, an employee is not entitled to encash the casual leaves he is entitled to.

Carry Forward of Leaves and Annual Encashment

A worker is allowed to carry forward his leaves to the succeeding year in the event the worker does not avail the whole of the leave allowed to him. However, such carry forwarding of accumulated holidays is restricted to a maximum of thirty (30) days in case of an adult and forty (40) days in case of a non-adult worker. In some cases, such as where leave was refused to the worker in accordance with the provisions of the Factories Act, a worker may be allowed to carry forward his leave without any limit. The law does not specifically provide for the option of leave encashment, however, it does not prohibit a worker from voluntarily choosing the option of leave encashment. Therefore, in practice, leave encashment policy is either part of the Human Resource (HR) Policy of an organization or forms part of the employment contract of a worker. Since the law does not specifically provide for leave encashment mechanism, however, by virtue of Section 80 of the Factories Act, that entitles a worker for wages at a rate equal to the daily average of his total full time earnings for the days on which he actually worked during the month immediately preceding the leave. Such wages shall be exclusive of any overtime wages for the purpose of calculating the wages for leave period but inclusive of dearness allowance and cash equivalent of regular advantages such as concessional food or other articles.

Similarly, a non-factory employee is entitled to carry forward his leaves as per the relevant provisions of the shops & establishment acts of the respective states. In Delhi, an employee may carry forward his accumulated privilege leave to the succeeding year subject to a maximum of three times the period of privilege leave to which he is entitled after every twelve months' employment. However, casual leaves may not be carried forward.

This article was written by Mr. Singla for Knowledge Center of IJTIB- January 2014.
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