Earned leave is paid time off provided by the company and accounted for based on the employee’s days of work. It’s also known as privilege leave (PL) or vacation leave (VL).
Unlike sick or casual leave, which are granted for unforeseen situations, earned leave meaning are planned and offered as a reward for consistent attendance from employees.
As per the Factories Act, the employees get to earn one day of leave for every 20 hours they have worked. Depending on the company also allows a financial benefit to employees.
The surrender of earned leave refers to when employees prefer to encase their unused EL instead of using it. The process is common when employees are resigning or retiring from
List of Earned Leave Rules in India
While the core earned leave means rules is similar, the specific ones may differ based on the company and the industry in India. It includes:
- Eligibility: Employees are required to be eligible to earn the leave after completing 240 working days in a calendar year. The eligibility criteria may depend on the state or industry.
- Accrual: Also, it accrues monthly or annually, typically at the rate of 1 day to every 20 days worked.
- Carry Forward: The unused earned leave can be carried forward up to 30 or 60 days. It depends on the policy and state law. However, the EL may also be encased or lapse.
- Approval requirement: To get their leave approved, the employees are required to submit their application in advance and report to their manager or HR. However, the request may be denied if there is a need for staff or a workload.
- Encashment: Earned leave can be encased if employees are there during their resignation or retirement period. The rule depends on the policy, the basic salary + DA, and may follow a tax deduction.
- Application: The leave requires to be submitted via the HR portal or by formal request. The process takes from 7 to 15 days in advance. If it’s an emergency, it may require justification.
- Combination with other leaves: The earned leave often combines with other leaves provided to employees. It can be sick, casual or restricted holidays.
Calculation & Formula for Earned Leave
Earned leave calculation is based on the number of days employees have worked during their period. The formula is:
Earned Leave = Number of days worked in the year / 20
For example, if the employees have worked for 240 days in a year, their calculation will be:
Earned leave = 240/20 = 12 days
This means the employee will have 12 days of earned leave.
Leave Encashment Calculation
When an employee leaves the company or reaches the maximum carry forward limit, they are eligible to receive leave encashment. It can be calculated used using earned leave calculation formula :
Leave Encashment = Basic Salary/ 30 x Unused Earned Leaves.
How To Apply For the EL?
To apply for the earned leave, the employees are required to follow steps such as:
- Review the available EL either by contacting HR or through the HR portal.
- Review the company’s rules and policy for earned leave, including the requirement in documentation and notice period.
- Fill out the application specifying details like dates and reasons through the prescribed channel.
- The application requires processing, and the reviewers need to get approval.
Conclusion
For HR professionals, understanding the nuances of earned leave is for effective workforce management and personal well-being.
Following correct rules, procedures, and meaning helps in maximizing employer and employee benefits.
This is where HROne’s HR solution ensures streamlining the management and ensuring compliance, transparency, as well as employee satisfaction. Try HROne for free!
FAQs
What is earned leave?
Earned leave is a type of paid leave provided to employees based on how many days they have worked. It can be used for vacations, personal needs or long breaks.
How to calculate earned leave ?
Earned leave is calculated by dividing the total number of days worked by the company’s applicable rule.
Can earned leave be rejected?
Yes, it can be a legal entitlement; however, it may get rejected based on insufficient notice, business requirements, and overlapping with other team members’ leaves.
How to apply for earned leave ?
To apply, the employee is required to connect through the HR portal or use a leave management system. Also, formal leave to their reporting manager.
Can a restricted holiday be combined with earned leave?
Restricted holidays can be combined with an employee’s earned leave, which may be subject to management approval.
How are earned leaves calculated?
The earned leave can be either calculated monthly (per month) or annually (per 20 days worked). It is based on the company’s policy or per applicable labor laws.
How to avail yourself of earned leave?
To avail of the earned leave, the employee is required to submit their leave requests beforehand to receive approval from the HR team.
What is earned leave salary?
Earned leave salary refers to the amount paid during the employee’s EL period or earnings from unused leave. It’s calculated based on the current salary with DA.