Taking leaves is the legal right of employees working under any organisation in the country. The employers should initiate the leave policy creation if they are all set to hire candidates. It is one of the essential policies that both employers and employees will access every day. The organisation should elucidate how many paid, unpaid leaves, and holidays they will offer for the workers. Besides holidays and weekends, employees can also take certain leave types, including sick leave, casual leave, bereavement, and more.
This blog will be a resourceful guide for every HR professional trying to create a leave policy that suits their business needs.
What is a leave policy?
Leave policy is the document that includes information about leave allocation for the upcoming annual year, created by the HR department under the management team’s guidance. HR professionals should be aware of local laws when creating documentation. In India, the Factories Act and the state-level Shops and Commercial Establishment Acts govern the business of leaves. Employers share the document with the employees once a year and also provided to the new hires.
A few aspects impacting the company’s leave policy
- Company size
- Employment duration
- Employee designation
- Weekend policy
- Geographical location of the company
- Public holidays of the year
Why do companies need a leave policy?
Every employee has the right to take leave, and business owners have a statutory obligation to do so. Workers must spend quality time off work to maintain a work-life balance. Birth, death, illness, family events, and many other circumstances necessitate the individual to apply for leave.
If a well-crafted leave policy is in place, it would be much easier for an employee to step down from work and take up responsibilities in personal life. There would be no concerns about losing pay when taking time off.
Leave laws in India
Factories Act
“An employee who works 240 days a year earns one leave for every 20 days worked.”
The Factories Act of 1948 governs labour laws in India, and this law vouches for the welfare of factory workers across industries. Employees can take one day of leave for every twenty days worked after they complete a tenure of 240 calendar working days in a company. For young workers, the maximum limit is 15 days, and adults can take up to 20 days. No employer can dismiss the workers for taking leave, and it is the responsibility of the employer to pay the wages in advance.
Industrial Establishments Act
“Organisations must observe Republic Day, Independence Day, and Gandhi Jayanti as holidays.”
As per the National and Festival Holidays or Industrial Establishments Act, organisations must declare holidays on Republic Day (January 26), Independence Day (August 15) and Gandhi Jayanthi (October 2). The state government can decide on other local festivals. For instance, the Tamil Nadu Industrial Establishment pushes companies to offer four national and five festival holidays.
Maternity Benefit Amendment Act
“Working women are entitled to 26 weeks of paid maternity leave after 80 days of work.”
The Maternity Benefit Act empowers working women to take paid leave for twenty-six weeks. Working mothers are entitled to utilise this for the first two children, and after that, they will be entitled to 12 weeks of paid leave. Eighty days of work completion in any organisation is required to avail of the benefit. This act safeguards women’s employment during maternity leave.
Shops and Establishments Act
“Working conditions, employment terms, and leave entitlements in commercial establishments across India are regulated, with state-specific variations.”
The Shops and Establishments Act is applicable to commercial establishments across India. The act was established to regulate working hours, rest intervals, and leaves for employees. Leave entitlements under this act vary by state but generally include provisions for certain leave types.
Typically, employees are entitled to one day of leave for every 20 days worked, with the option to carry forward a portion of unused leave. The act ensures employees in shops and establishments have a structured leave policy, promoting work-life balance and protecting their rights in the unorganised sector.
Importance of leave policy
Employee satisfaction
- Mental peace is one of the huge factors considered while evaluating employee satisfaction in an organisation. Mental well-being requires some time off from the usual routine, and every worker in the organisation can use the leaves to rejuvenate.
- Employees must fulfil some personal commitments in addition to work responsibilities, and they should be able to take leaves in such circumstances without having to worry about their compensation being deducted.
- When employees know the number of leaves they can take in a year, they can prioritise leaves for the most important events.
Better work culture
- A well-documented policy for paid, unpaid, and holiday leave directs employees to use all their leaves in an organised manner. This reduces the risk of conflicts in leave planning and will make it easier for management to implement reliable resource planning.
Liberty with limitations
- Limitations are crucial in every business, so it will help workers to choose a path based on employer guidelines.
Crafting a perfect leave policy
- Choose the leave types for employees: Evaluate the employees’ needs and work demands to determine the suitable leave types.
- Levy clear rules and regulations: It is not just about the leave balances and types that should be mentioned prior. Instructions include, employees should notify management at least [X] days in advance before taking leave or a proper doctor’s note for medical leaves.
- Weekend policy declaration: Many firms follow regular workweeks (Monday through Friday), but a few have shifted to flexible schedules. The concept of hybrid work, 24/7 support, and other factors can impact the weekend policy. The company must lay out a suitable policy based on employees’ work styles and preferences.
- Technology usage: After crafting a policy, HR departments face the challenge of informing employees about it. However, it is also hard for the workers to stay informed about the leave balances for them. This is why top companies utilise the best leave management software. For instance, DigiSME leave management software let employers craft leave policies and announce the entire organisation effortlessly.
Wrapping up
In conclusion, crafting a comprehensive leave policy is essential for every organisation. It not only ensures compliance with legal requirements but also fosters a positive work culture, enhancing employee satisfaction and productivity. A well-defined leave policy allows employees to manage their personal and professional lives effectively, reducing stress and promoting work-life balance. Organisations can prevent misunderstandings and maintain smooth operations by clearly outlining leave types, rules, and regulations. Ultimately, a thoughtfully designed leave policy benefits both employers and employees, creating a harmonious workplace where everyone’s needs are respected and addressed.
