One of my clients recently had a case which I am explaining below and if you are stuck in such similar situation, here is what to do.
Note: Due to attorney-client privilege, I cannot disclose complete case details or identify the actual parties involved. However, I am sharing the essential facts and legal approach so that if you find yourself in a similar situation, you can understand the available solutions and legal remedies.
Mr. X approached me regarding his service-based company registered in City A but operating with remote employees across India. His team of under 10 employees was seeking clarity on mandatory leave entitlements and holiday calendar requirements. The confusion arose because while the company was registered in City A, employees worked from various states, creating uncertainty about which state’s labor laws would apply. Mr. X had read about 8 fixed holidays including 4 national holidays, with 1.5 days of earned leave per month, but was unsure about casual leaves, state-specific holidays, and the overall legal compliance requirements for his distributed workforce.
Advice in Such Cases
Consult with Lawyer: The very basic and important step to start is talk to Lawyer / advocate. You should not hesitate in paying his consultation fee i.e. might be in range of Rs. 10,000 to 50,000 depends case to case. He is helping you in this situation to come out. He is expert in the domain and can help you explain the procedure which you might have never explored. A good lawyer can get the issues resolved much faster than you think.
For employment law compliance, register with appropriate labor authorities in your state of incorporation. Maintain detailed employee records and leave policies in writing. Consider implementing a uniform leave policy that meets the highest standards among states where your employees reside. Regularly review and update policies as labor laws evolve.
Applicable Sections of Law
The primary legislation governing leave entitlements includes the Factories Act 1948, Shops and Establishments Acts of respective states, and the Industrial Employment (Standing Orders) Act 1946. Under BNS provisions related to employment disputes, Section 3 covers breach of contract matters. BNSS Section 173 deals with investigation procedures for employment-related complaints. The Payment of Wages Act 1936 and Contract Labour Act 1970 also apply to service sector companies with specific leave and wage payment requirements.
If You Are the Complainant
Document all employment terms, leave policies, and holiday calendars provided by your employer. Maintain records of leave applications, approvals, and rejections with dates and reasons. File complaints with the Labor Commissioner of your state if leave entitlements are denied. Approach the appropriate labor court if employer refuses to comply with mandatory leave provisions. Keep evidence of salary slips, appointment letters, and any written communication regarding leave policies. Consider approaching employee unions or associations for collective bargaining if individual complaints are not addressed.
If You Are the Victim
Gather all employment documents including offer letter, employment contract, and salary statements. Document instances where mandatory leaves were denied or holidays were not observed. File a complaint with the Labor Inspector of your district within the prescribed limitation period. Approach the Employees’ Provident Fund Organization if PF-related leave benefits are involved. Maintain a record of working hours and overtime to support your leave entitlement claims. Seek legal remedy through labor courts if administrative complaints do not yield results.
How the Police Behave in Such Cases
Police generally do not handle civil employment disputes regarding leave entitlements. Such matters fall under labor law jurisdiction and are handled by Labor Inspectors and Labor Courts. However, if criminal breach of trust or cheating is involved in wage payments or leave settlement, police may register FIR under relevant BNS sections. Police may intervene if there are threats or coercion by employers preventing employees from availing legitimate leave rights.
FAQs People Normally Have
Which state’s leave policy applies for remote employees? Generally, the state where the company is registered, but employees may claim benefits under their residing state if more favorable.
Are startups with less than 10 employees exempt from leave laws? No, most labor laws apply regardless of company size, though some exemptions exist for very small establishments.
Can companies provide more than mandatory leaves? Yes, companies can provide additional benefits beyond statutory minimums.
What happens to unused earned leave? Typically carried forward or encashed as per company policy and state regulations.
What Evidence Is Required?
- Employment contract or appointment letter specifying leave entitlements
- Company leave policy document or employee handbook
- Leave application records with approval/rejection status
- Salary slips showing leave encashment or deductions
- Email communications regarding leave requests and responses
- Attendance records or timesheets maintained by company
- Holiday calendar issued by the company for the relevant period
How Long Will the Investigation Take?
Labor department investigations typically take 2-3 months for straightforward leave entitlement cases. Complex cases involving multiple employees or states may extend to 6 months. Court proceedings can take 1-2 years depending on case complexity and court backlog. Administrative remedies through Labor Commissioners are generally faster than judicial proceedings.
Advocate Sudhir Rao, Supreme Court of India