New Labour Laws to Regulate Paid Leave Accrual for Employees

New Delhi: The implementation of four key labour laws in India is set to bring about significant changes across various domains. These laws, namely the Occupational Safety, Health and Working Conditions Code, Code on Wages, Industrial Relations Code, and Social Security Code, have already been passed by Parliament and await their effective date.

One crucial aspect of these labour laws is the regulation of paid leave accrual for employees. Under the Occupational Safety, Health and Working Conditions Code, employees who are not in managerial or supervisory roles are subject to specific rules regarding paid leave accumulation. According to Section 32 of the OSH Code, workers can carry forward annual leave to the next calendar year, but this carry-forward is limited to a maximum of 30 days.

Importantly, if an employee’s annual leave balance exceeds the 30-day limit at the end of the calendar year, the excess leave must be encashed by the employer. This provision ensures that paid leave does not accumulate indefinitely and must be managed within the specified limits.

This change signifies a departure from the current practices in many organizations, where leave encashment on an annual basis is often not permitted, and paid leave balances can exceed carry-forward limits without consequence. With the impending implementation of these labour laws, it becomes imperative for both employers and employees to adhere to these regulations.