The whole country is waiting for the new labor law. After the implementation of these laws, the rules will change significantly for both the owner and the employee. Which includes take home salary, contribution to EPF account, calculation of number of paid leaves available in a calendar year and maximum working hours in a week. In one of the four labor codes, guidelines have also been given regarding the holidays of the employees.
According to the code, no employee can collect more than 30 paid leaves in a calendar year. If an employee has more than 30 paid leaves accumulated in a calendar year, then the company will have to pay for those who are in excess of 30. In this case, 'employee' refers to workers who are not in managerial or supervisory positions.
It is to be noted that the Occupational Safety, Health and Working Conditions Code, Wage Code, Industrial Relations Code and Social Security Code are awaiting notification from which date these four laws will come into force. Four new labor laws have been passed by the Parliament. These laws have also been notified by the government.
How much leave can be taken in cash?
Saumya Kumar, partner at law firm Induslaw, says in the media report that Section 32 of the Occupational Safety, Health and Working Conditions Code, 2020 has many rules and conditions regarding taking annual leave, carry forward and encashment. Section 32 (vii) An employee is allowed to carry forward annual leave up to a maximum of 30 days in the next calendar year. If the annual leave balance exceeds Rs 30 at the end of the calendar year, the employee can encash it. The remaining 30 holidays can be carried forward to the next year. Experts say that after the introduction of the new rule, the system of unused leave lapse will be completely abolished.
When can you get leave encashed?
According to the Occupational Safety, Health and Working Conditions Code, 2020, if the leave balance is more than Rs 30, the employee will be able to encash the additional leave, says Puneet Gupta, Partner, People Advisory Services, EY India. Such leave encashment will be made at the end of each calendar year. Annual leave for workers cannot expire as per the Labor Code and will have to be taken or carried forward or encashed.
At present, many organizations do not allow leave encashment on an annual basis. Both Kumar and Gupta believe that leave encashment on an annual basis will have a financial impact on the employer. Gupta of EY India says that the implementation of OSH provisions can have a financial impact as well as an impact on the cash flow of the employer.
Calculation of leave encashment
Once the government implements the OSH code, it will become mandatory to encash leave in excess of the prescribed limit. The next question is how much salary will be given to an employee. Will leave encashment be done on the basis of daily basic pay or will other allowances like special allowance, house rent allowance also be taken into consideration? According to Gupta of EY India, under the OSH code, the amount of leave encashment will be calculated according to the salary specified in the wage code.
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