In a significant move to acknowledge work-life balance, the government’s new labour laws will have a few changes that will benefit employees in more than one way. One of the laws will mandate companies to compensate employees who have not claimed more than 30 days of leave.
The Occupational Safety, Health and Working Conditions Code, 2020 defines an “employee” as a person who is employed to do any work, skilled or unskilled, manual or clerical, in or in connection with the business of an establishment, whether the terms of employment be express or implied.
Read More: RBI Committed to Bring Down Inflation to 4%; Watchful of Price Risks: Governor Das
The code also clarifies that “managerial or supervisory” employees are not covered by the definition of “employee”. Managerial employees are those who are responsible for the overall management of the establishment, while supervisory employees are those who are responsible for supervising the work of other employees.
The four labour laws — Occupational Safety, Health and Working Conditions Code; Code on Wages; Industrial Relations Code; and Social Security Code — have been passed by Parliament and notified by the government. However, they have not yet come into force. The effective date of the laws has not yet been announced. The codes or laws are one of the most major economic changes implemented by the Modi government.
Read More: IDBI Bank Privatisation: Government Invites Bids To Appoint Asset Valuer
“Section 32 of the Occupational Safety, Health and Working Conditions Code, 2020 (OSH Code), has a number of 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, up to a maximum of 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,” Sowmya Kumar, partner at law firm INDUSLAW, said, according to an Economic Times report.
“As per the Occupational Safety, Health and Working Conditions Code, 2020, if the leave balance exceeds 30, the worker will be entitled to encash the excess leave. Such leave encashment will be done at the end of each calendar year. The annual leave for workers cannot lapse under the labour codes and will have to be availed or carried forward or encashed. Currently, many organisations do not allow leave encashment on an annual basis as well as for the paid leave balance to exceed the carry forward limit,” ET report quoted Puneet Gupta, partner (people advisory services) at EY India as saying.
Read More: India Has Potential to Do 100 Billion UPI Transactions a Month: NPCI CEO
He further pointed out that the OSH Code’s rules on yearly leave and leave encashment apply only to ‘workers,’ or personnel who do not hold managerial, administrative, or supervisory positions.
Leave encashment is the compensation made by an employer to an employee for unutilized paid leaves at the time of retirement or resignation. Every salaried employee is entitled to a certain number of paid leaves each year under labour legislation. Employees are not required to use all of their accrued leaves, and many employers allow them to carry over unused leaves to later years.
