Notice of Periods of Work and Annual Leave with Wages

Section 31(3), the change rule. This is the examinable part. Any proposed change in the system of work which will necessitate a change in the notice:

• shall be intimated to the Inspector-cum-Facilitator before the change is made; and
• except with the previous sanction of the Inspector-cum-Facilitator, no such change shall be made until one week has elapsed since the last change.

Read section 31(3) as two separate rules, because students run them together. First, every change must be notified in advance. Second, changes may not come faster than one a week, unless the Inspector-cum-Facilitator sanctions it in advance. The second rule exists because an employer who reshuffles the timetable every other day makes the hours limits impossible to police.

Section 32(1): the nine conditions of annual leave

Every worker employed in an establishment is entitled to leave in a calendar year with wages, subject to nine conditions.

(i) The qualifying period. He must have worked one hundred and eighty days or more in that calendar year.

(ii) The rate, and it differs three ways:

The two better rates go to the two most vulnerable groups: the young, and those working underground.

(iii) What counts towards the one hundred and eighty days. Any period of layoff, maternity leave or annual leave availed in that year shall be counted for the one hundred and eighty days, but he shall not earn leave for the period so counted.

That clause has two halves and both matter. Those periods help him qualify but do not generate leave. A student who says maternity leave earns annual leave has read only the first half.

(iv) Holidays inside the leave. Any holidays falling between the leave availed, whether in the calendar year or prefixed or suffixed, shall be excluded from the period of leave so availed. So a public holiday in the middle of a fortnight's leave is not counted against his leave.

(v) Joining mid-year. A worker whose service commences otherwise than on 1 January is entitled to leave at the same rate if he has worked one fourth of the total number of days in the remainder of the calendar year.

(vi) Leaving before the year ends. Where a worker is discharged or dismissed, quits, is superannuated, or dies while in service during the calendar year, he, or his heir or nominee, is entitled to wages in lieu of the leave he was entitled to immediately before that event, calculated as above, even if he has not worked the qualifying period. Payment is to be made:

• (a) where he is discharged, dismissed or quits, before the expiry of the second working day from that date;
• (b) where he is superannuated or dies in service, before the expiry of two months from that date.

Clause (vi) is the most useful provision in the section and the one to cite in a problem. Note three things: it applies even to a worker dismissed, it applies even if he never reached one hundred and eighty days, and the payment deadline is two working days on discharge, dismissal or quitting, which is very short.

(vii) Carry forward. If he does not take the whole of his leave in a calendar year, the untaken leave is added to the next year, so that:

• (a) the total carried forward shall not exceed thirty days; but
• (b) a worker who applied for leave with wages and was not given it is entitled to carry forward the leave refused without any limit.

(viii) Encashment on demand. Without prejudice to clause (vi), the worker is entitled on his demand to encashment of leave at the end of the calendar year.

(ix) Encashment of the excess. Where his total leave exceeds thirty days under clause (vii)(a), he is entitled to encash the excess.

Clauses (vii), (viii) and (ix) fit together. He may carry thirty days; anything above that he encashes rather than loses; and in any event he may demand encashment at the end of the year. Leave is never simply forfeited.

Section 32(2) and (3): extension and mines

Section 32(2). The appropriate Government may by notification extend sub-section (1) to any other establishment except a railway establishment.

Section 32(3), mines and better terms. Sub-section (1) shall not operate to the prejudice of any right to which a person employed in a mine may be entitled under any other law or under the terms of any award, agreement or contract of service.

The first proviso. Where such an award, agreement or contract provides longer annual leave with wages, the quantum is as provided in that instrument, but the leave is regulated by sub-section (1) on matters not provided for in it.

The second proviso. Where the Central Government is satisfied that the leave rules applicable to persons employed in a mine provide benefits not less favourable than sub-section (1), it may by order in writing, subject to specified conditions, exempt the mine from all or any of the provisions of sub-section (1).

The pattern is the familiar one: the Code is a floor, better terms survive, and where an existing scheme is at least as good the Code may stand aside.

A worked example

Pooja joins a plastics factory on 1 April 2026 and works two hundred days in that calendar year.

Does she qualify? She joined otherwise than on 1 January, so clause (v) applies: she qualifies if she worked one fourth of the total number of days in the remainder of the calendar year. From 1 April there are 275 days, one fourth of which is about 69, and she worked 200.

How much leave? At one day for every twenty days of work: ten days: clause (ii).

A public holiday falls in the middle of a week she takes off. It is excluded from the period of leave availed: clause (iv). It does not eat into her ten days.

In the following year she is laid off for six weeks and takes her annual leave. Those periods count towards her one hundred and eighty days but she earns no leave for them: clause (iii).

She takes only four of her fourteen days that year. The ten untaken days are added to the next year, subject to the thirty day cap: clause (vii)(a).

Her total reaches thirty-four days. She may encash the four days above thirty: clause (ix). She may also demand encashment at the end of the calendar year in any event: clause (viii).

In a later year she applies for fifteen days and the employer refuses. Those refused days may be carried forward without any limit: clause (vii)(b). The thirty day cap does not apply to leave the employer would not let her take.

She resigns in March with eight days of untaken leave, having worked only fifty days that year. She is entitled to wages in lieu of the leave she was entitled to immediately before quitting, even though she has not worked the qualifying period, and it must be paid before the expiry of the second working day from the date she quits: clause (vi)(a).

Had she died in service? Her heir or nominee is entitled to the same, payable before the expiry of two months from the date of death: clause (vi)(b).

Now change the workplace. Suresh works below ground in a coal mine and worked two hundred days.

How much leave? At one day for every fifteen days: about thirteen days, against Pooja's ten for the same two hundred days: clause (ii).

His employer's settlement gives him twenty days. The settlement prevails on quantum under the first proviso to section 32(3), but the leave is regulated by section 32(1) on everything the settlement does not cover.

Now the notice. The factory wants to move the second shift by an hour.

What must it do? Intimate the change to the Inspector-cum-Facilitator before making it, and, unless the Inspector-cum-Facilitator gives previous sanction, it may not make the change until one week has elapsed since the last change: section 31(3).

What this does NOT mean

Not every worker gets leave. Clause (i) requires one hundred and eighty days or more in the calendar year, subject to the mid-year rule in clause (v) and the leaving rule in clause (vi).

Layoff and maternity leave do not earn leave. Clause (iii) counts them towards the qualifying period only.

Untaken leave is not forfeited. It is carried forward up to thirty days, encashed above that, and encashable on demand at the end of the year.

The thirty day cap does not apply to refused leave. Clause (vii)(b) allows unlimited carry forward of leave applied for and not given.

A dismissed worker does not lose his leave wages. Clause (vi) expressly covers a worker discharged or dismissed.

Limits and criticism

One day for every twenty is a low rate. A worker with two hundred and forty working days earns twelve days of leave a year, which is well below international norms and below what most organised sector employers give by contract.

The one hundred and eighty day threshold excludes seasonal and intermittent workers from annual leave altogether, subject only to the mid-year and leaving provisions.

Encashment can defeat the purpose. Clauses (viii) and (ix) let leave be turned into money at the worker's demand, which is welcome for a poor worker and works against the rest the section exists to secure.

Section 32(2) permits extension to other establishments but excludes railways without stating a reason.

Quick revision

• Section 31: a notice of periods of work displayed and correctly maintained, showing the periods for every day; form, display and sending to the Inspector-cum-Facilitator prescribed; section 31(3): any change intimated before it is made, and no change within one week of the last except with the previous sanction of the Inspector-cum-Facilitator.
• Section 32(1), nine conditions: (i) 180 days; (ii) one day per 20 worked, per 15 for an adolescent, per 15 below ground in a mine; (iii) layoff, maternity leave and leave availed count towards 180 but earn no leave; (iv) holidays inside, prefixed or suffixed are excluded from leave availed; (v) joining mid-year, one fourth of the remaining days; (vi) on discharge, dismissal, quitting, superannuation or death, wages in lieu even without the qualifying period, paid within two working days, or two months on superannuation or death; (vii) carry forward capped at thirty days, but refused leave without limit; (viii) encashment on demand at the end of the year; (ix) encashment of the excess over thirty.
• Section 32(2): extension by notification to any other establishment except railways. Section 32(3): no prejudice to better rights in a mine; a longer award, agreement or contract prevails on quantum; the Central Government may exempt a mine whose leave rules are not less favourable.

Test yourself

1. What must a worker do to qualify for annual leave, and at what rate does he earn it? He must have worked one hundred and eighty days or more in the calendar year, and he earns one day of leave for every twenty days of work, or every fifteen days if he is an adolescent worker or is employed below ground in a mine: section 32(1)(i) and (ii).

2. Does maternity leave earn annual leave? No. Under clause (iii) a period of layoff, maternity leave or annual leave availed is counted towards the one hundred and eighty days, but the worker shall not earn leave for the period so counted.

3. How much leave may be carried forward, and is there an exception? Not more than thirty days: clause (vii)(a). But a worker who applied for leave with wages and was not given it may carry forward the refused leave without any limit: clause (vii)(b).

4. A worker is dismissed in June with untaken leave and has worked only ninety days. What is he entitled to? Wages in lieu of the quantum of leave to which he was entitled immediately before his dismissal, calculated as in the preceding clauses, even though he has not worked the qualifying period; and it must be paid before the expiry of the second working day from the date of dismissal: clause (vi) and (vi)(a).

5. A worker dies in service. Who is paid and by when? His heir or nominee, before the expiry of two months from the date of death: clause (vi)(b).

6. An employer wants to change the shift timings twice in one week. May he? Not without the previous sanction of the Inspector-cum-Facilitator. Section 31(3) requires any change necessitating a change in the notice to be intimated before it is made, and forbids a further change until one week has elapsed since the last change except with that sanction.