Annual Leave Under the Occupational Safety Health and Working Conditions (OSHWC) Code

Background

The Occupational Safety Health and Working Conditions Code, 2020 repeals and codifies 13 laws relating to working conditions, hours of work, annual leave, safety measures etc. It has been brought in with the intention of providing for a basic degree of uniformity with regards to these aspects. The OSHWC Code has been passed by Parliament and has received Presidential assent. It’s draft Central rules are in the process of being tabled before the Standing Committee before they are passed.

This article shall examine the provisions relating to annual leave under the Code and analyze its impact. It shall also examine the class of employees to whom these provisions apply and the reasons for the same.

Annual Leave Under Section-32

The above provision states that every worker employed in an establishment shall be entitled to leave with wages in every calendar year. The same is made subject to certain conditions, they are as follows:-

Eligibility

The worker must have worked for 180 days or more in a calendar year;

Rate and Manner of Calculating Annual Leave

The leave entitlement shall be at the rate of one-day leave for every 20 days of work; In case of adolescent workers and workers employed below ground mine the same is one-day leave for every 15 days of work;

Any layoff, maternity leave or annual leave availed by a worker in a calendar year shall be included for calculating 180 days mentioned above. However, a worker may not earn leave for the period so counted;

Prohibition of Sandwich Leave Policy

Any holidays that fall in between the leave availed by a worker shall be excluded from the period of leave so availed. This ensures that sandwich leave policies are not enacted by organizations. Such policies include holidays that fall between leave availed as part of leave taken by employees;

Workers Who Join Otherwise Than On 1^st January

In case of workers whose service commences otherwise than on the first day of January, the worker shall be entitled to leave with wages at the rate specified above. This is subject to the requirement that the worker has worked for 1/4^th of the total number of days in the remainder of the calendar year;

Workers’ Right to Wages In Lieu of Leave

Where a worker is discharged/dismissed from service or quits employment or is superannuated or dies while in service, during a calendar year, such worker or his heir/nominee shall be entitled to wages in lieu of the quantum of leave to which such worker was entitled. This is applicable even if such a worker has not worked for the requisite number of days. The payment shall be made:-

• Before the expiry of the second working day from the date of discharge/dismissal or resignation

• Before the expiry of two months where such worker is superannuated or dies while in service

Carry Forward of Leave

If a worker does not avail the whole of the leave allowed to him in any one calendar year, then, any leave not taken shall be added to the leave to be allowed to him in the succeeding calendar year. This is subject to the following conditions:-

• The total number of days of leave that may be carried forward to a succeeding year does not exceed 30 days;

• The worker who has applied for leave with wages but has not been granted the same shall be entitled to carry forward the leave refused without any limit;

Leave Encashment

Without prejudice to the stipulation under clause (vi) a worker shall be entitled to encashment of leave at the end of a calendar year if he requests the same.

Where the total quantum of leave exceeds 30 days as per clause (vii), a worker shall be entitled to encash such excess leave.

As seen from the above provisions, workers are entitled to leave at the rate of 1 day for every 20 days worked provided they work 180 days or more in a calendar year. Sandwich leave policies are prohibited and carry forward of leave is permitted subject to a cap of 30 days. Workers are entitled to encash the remainder of leave that is not carried forward and wages in lieu of leave are to be provided to workers who are dismissed/discharged/resigned or those who are superannuated or have died in service.

Who does the above apply to?

The opening words of Section-32 state that the provision applies to every worker employed in an establishment, thus, to understand the application of the annual leave provisions we must examine the definitions of worker and establishment, respectively.

The definition of worker is inclusive and means any person employed in any establishment to do any manual, unskilled, skilled, technical, operational, clerical, or supervisory work for hire or reward. It does not include individuals employed in managerial or administrative capacities as well as those in supervisory capacities drawing wages in excess of Rs. 18,000.

The definition of establishment is extremely broad and includes a place where industry, trade, business, manufacturing, or occupation is carried on with ten or more workers, factories where ten or more workers are employed, mines, ports, motor transport undertaking etc.

Thus, the provisions relating to annual leave apply to workers employed in almost all types of establishments. It is also safe to conclude that those falling outside the scope of the definition of worker as explained above shall not be subject to the provisions of Section-32.

Conclusion

From the above analysis of the applicability of Section-32 to establishments as defined under the Code, it is possible that a conflict of laws might arise. Due to the broad definitions of establishment and worker respectively, Section-32 is applicable to establishments currently regulated under the Shops and Establishments Acts of various states. The term worker is similarly defined under them as well and thus there might be confusion over which law prevails.

This can be understood through the following illustration:-

Several state laws have different requirements when it comes to leave encashment. Take for example, Section-18(6) of the Maharashtra Shops and Establishments (Regulation of Employment and Conditions of Service) Act, 2017 provides for accumulation of earned leave up to a maximum of 45 days. This is more than that provided under the Code and were a question of conflict between the two to arise, courts would be in a dilemma. The reason for this is when there is conflict between beneficial legislation, the interpretation drawn is generally in favour of the stakeholder.

If the above is adopted, then we may see differing applications of the Code across India which will be extremely problematic for pan-India establishments. Thus, the onus is on State Governments to clarify the status of the Code’s provisions through the State Rules that are to be implemented. This is the best way to resolve the above conflict and ensure the objective of the Code is achieved.

Is there, according to you, a better way to resolve the above conflict? Are you unsure of whether the above will apply to your establishment?

Drop your thoughts and queries in the comments.

Disclaimer: This blog is meant for informational purposes and discussion only. It contains only general information about legal matters. The information provided is not legal advice and should not be acted upon without seeking proper legal advice from a practicing attorney. Simpliance makes no representations or warranties in relation to the information on this article.