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Thursday, 5 June 2014

Queries on Leave without pay and compliance surrounding the same

1)     While an employee is on leave without pay (LWP) due to maternity/illness/absconding etc. either approved or not, given that employee is not getting any salary  – is it mandatory to pay 50% of HRA to the employee during this period of leave?

  HRA or any other allowance given as part of salary and not reimbursement would be included. Please note the definition of wages as per Maternity Benefit Act and Bombsy Shops & Establishment Act (referring to payment of wages Act) includes everything

Maternity Benefit Act
"wages" means all remuneration paid or payable in cash to a woman, if the terms of the contract of employment, express or implied, were fulfilled and includes-
(1) such cash allowances (including dearness allowance and house rent allowance) as a woman is for the time being entitled to ;
(2) incentive bonus; and
(3) the money value of the concessional supply of foodgrains and other articles, but does not include-
Bombay Shops & Establishment Act read with Payment of Wages Act

"wages" means all remuneration (whether by way of salary, allowances or otherwise) expressed in terms of money or capable of being so expressed which would, if the terms of employment, express or implied, were fulfilled, be payable to a person employed in respect of his employment or of work done in such employment
but does not include-
the value of any house-accommodation, or of the supply of light, water, medical attendance or other amenity or of any service excluded from the computation of wages by a general or special order of the Appropriate Government ;

Thus if it is excluding the components of salary, you need to give, else you need not give during LWP. 

2)     During the LWP whether employer can stop the PF contribution?
  PF is deducted on earned Basic + DA. Since there is no earned Basic + DA during Leave Without Pay, there cannot be any PF deduction. 

3)     With respect to earned leave – AS per our policy, the leave is accrued. i.e. 1.6 days accrues after one month of work.  What is the position if employee is on LWP? What about employee who proceeds on paid maternity and then avails three months unpaid leave (as per our policies)? Is she entitled to the 1.6 accrued leave each for the 3 months of LWP?

Maternity Leave or Maternity benefit of 84 days as per Maternity Benefit Act should not be mixed with general leaves as per Shops & Establishment Act or company policy whichever is higher.  However, female employees who avail leave on and above of provisions of Maternity Benefit Act would come under general provisions as per Shops & Establishment Act or leave policy , whichever is higher. In the above given scenario, the accrued leave to be deducted for three months of additional leave without pay which is outside purview  of Maternity Benefit Act

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