Leave & Working Hours
Statutory Leave is leave that supports a healthy work-life balance and helps motivate employees. It enables employees to take time off for reasonable causes without salary deductions, as provided under applicable Labour Codes.
Working Hours are the hours an employee is expected to work in exchange for pay. Employees are required to comply with the company’s working-hour requirements as part of their employment, subject to the applicable Labour Codes.
Leave
The Shops and Establishments Act is enacted by every state in India. It regulates payment of wages, working hours, rest intervals, opening and closing hours, holidays, overtime, annual leave, sick leave, casual leave and other conditions of employment.
Concept of Leaves
Employees are entitled to a certain number of leave days each year, apart from holidays and weekly days off. Generally, three types of leave are recognised under the Shops and Establishments Act: Privilege Leave, Sick Leave and Casual Leave. The rules vary from state to state, so the entitlement depends on the state in which the establishment is located.
An establishment’s leave policy should align with the leave provisions of the relevant state Shops and Establishments Act and cannot be less beneficial than those provisions.
Although the overall framework is generally similar across India, leave provisions vary by state.
Leave & Working Hours for States Across India
The states in which leave and working-hours provisions apply are listed below.
Leave & Working Hours Applicable States and Union Territories
Leave and working-hours provisions apply across all Indian States and Union Territories. The specific entitlements, working-hour limits, weekly holidays, leave types and compliance requirements may vary under the applicable State Shops and Establishments Act and other relevant labour laws.
Employers should verify the current rules applicable to the location of each establishment and maintain a leave policy that is at least as beneficial as the statutory requirements.
Types of Leave
Earned Leave / Privilege Leave
These are additional leave days awarded to an employee with wages for the day’s work performed, for a specific number of days prescribed under the Shops and Establishments Act. The conditions for availing Earned or Privilege Leave may differ between establishments. The number of days that may be carried forward to the succeeding year is prescribed under the applicable Act. Employees may also be entitled to encash Earned or Privilege Leave under the relevant state law and rules.
The following individuals are exempted to pay Professional Tax:
Casual Leave
Casual Leave is granted for an unexpected event or when an employee cannot attend the office for a day or two due to a personal emergency. The entitlement varies by state under the Shops and Establishments Act. Companies normally limit Casual Leave to a short duration. Longer leave may require prior permission or a valid reason upon returning to work. Casual Leave is generally not combined with other leave, except where permitted due to an insufficient leave balance. It is usually not encashable or carried forward.
Sick Leave
An employee may take Sick Leave in case of illness. Wages are paid during Sick Leave when the employee is absent due to sickness. The number of Sick Leave days is fixed by the establishment in accordance with the applicable state Shops and Establishments Act. In some states, accumulated Sick Leave may be carried forward and used in the following year.
Overtime Work
Overtime is work performed beyond regular working hours. In India, regular hours may be eight to nine hours per day and forty-eight to fifty hours per week, depending on the establishment. When an employee works beyond the hours prescribed under the applicable Act, overtime wages are generally payable at twice the ordinary wage rate. Several statutes regulate overtime and overtime payments, and different laws may prescribe different working-hour limits.
Spread-Over Hours
Spread-over means the total working period of an employee, including rest breaks and overtime.
Interval for Rest
An interval for rest is a break taken during working hours.