Understanding Open Leave Concept, EPF Contribution Rules, and Employee Benefits

Dear All,

Greetings! Can you please help with the concept of 'open leave'? I have been hearing a lot about it nowadays.

Thanks in advance.

An open leave policy is a policy wherein the employer gives flexibility to the employees on the number of leaves and when to take them. In other words, there is no fixed number on the leaves, no categorization of leaves as Sick/Casual/Earned/Special leaves.

Now, an Open Leave policy has its own pros and cons. In my organization, there was an open leave policy structure, but it affected us adversely because -
- A particular department took leaves as high as 30-40 days per annum.
- Another department wasn't able to avail leaves so frequently.
- People not taking leaves weren't able to distinguish themselves as they weren't recognized.

So, we switched to the traditional maximum X leaves per annum policy. You need to figure out how the policy would impact your organization depending on the nature of work, industry/sector you fall into, and the kind of people.

Wish you luck and hope it helped :)

Hello Respected Seniors,

I have a question: if an employee chooses not to deduct PF at the time of joining, but later on, after 1 year, he decides to opt for PF deduction. So, in that case, is it mandatory for the employee to pay the employer contribution as well? I mean, is this a rule or something?

I want to deduct my PF but don't want to pay the employer contribution as I want my company to pay half of it.

Details are as follows:
Basic: 9000
HRA: 4000

Please suggest.

Regards,

Yash

As far as terms are considered, PF contribution is compulsory on both ends if Basic is less than or equal to 6,500. Beyond that, many companies contribute to PF (with the maximum salary considered as 6,500), but it is at the discretion of the company. When Basic is more than 6,500, then there is no law to force the employer to contribute. However, the employee can contribute voluntarily if they wish to. Seniors, please confirm the same.

Thanks, Ankita, for the response. But if the employee pays the employer's part as well, then what will be the benefit of it for the employee? I mean, what are the rest of the policies for this in terms of interest rate, and will this PF be the same as what other employees are getting or different? Please clarify.

Hi Yash,

Please understand this --

Employee PF has 2 contributions:

1. Employer's End (restricted to 12% of Basic + DA with that being less than 6500. This 12% is bifurcated further as 8.33% going to Pension and the remaining 1.67% going to PF)

2. Employee's End (Min 12% to voluntarily 20% of Basic + DA with that being less than or equal to 6500, the whole amount goes to PF Fund)

---------------------

Neither can the employer contribute on your behalf nor can you contribute on their behalf.

So what happens when your basic + DA > 6500

Employer has 2 ways -

Either he stops contributing his share (since he's not bound to)

Or he, out of goodwill, continues his share @ a rate of 12% on 6500

Employee has 2 ways -

He too stops contribution and handles the PF account accordingly

He continues his contribution as before (similar to Personal PF)

-----------------------------------

So to answer your query - You're not going to shell out 24% of your salary, only 12% (voluntarily, i.e., only if you wish to)

So there's no loss. Your deducted amount would go to the PF A/c, which would get interest and would be there as your retirement fund.

Hope I was able to clear your doubts.

I don't think it is compulsory on the employee's part as well. As far as my knowledge goes, even the employee has the chance to stop contributing and handle the PF account accordingly. PF is not governed by bonds, so the employer and employee can stop contributing in this case.

If you still wish to avail the benefits of PF, I would recommend, rather than opting for EPF, go for PPF.

I don't think it is compulsory on the employee's part as well. As I stated, to the best of my knowledge, even the employee has the chance to stop contributing and manage the PF account accordingly. PF is not governed by bonds, so both the employer and employee can cease contributing in this case.

If you still wish to avail the benefits of PF, I would recommend opting for PPF instead of EPF.

Ok, I understood, but why do you suggest I open a PPF account instead of EPF? What are the benefits of it? Please clarify my last question.

PPF is almost equivalent to EPF. In PPF, there is no compulsion for payment of 12% of your Basic; you can contribute a minimum of 500 to a maximum of 1 lakh (ceiling amount needs validation, please check on PF sites). Apart from that, PPF is very much similar to EPF. Many nationalized banks offer PPF. You can inquire more about it from there too. Of course, there is no other contribution; only you are contributing. There is no fixed amount; you just have to contribute every year, as said, a minimum of 500 at least.

EPF differs from PPF in one respect. In EPF, there is a concept of 'Employer's Contribution' (12% of Basic + DA), which does not feature in PPF. From the viewpoint of Income Tax, contribution to either is covered under Section 80C. However, contribution both by the employee and employer to EPF is mandatory if the employee's salary (Basic + DA) does not exceed Rs 6500/-.

As regards the issue of 'Open Leave', it is a 'difficult to implement concept' in the Indian environment and is thus not being practiced. However, it will benefit us all if someone (in whose company it is being followed) can guide us about the process deployed for leave approval, record-keeping, and analysis.

Rightly said sir,

As I said earlier, we practiced this policy earlier.

Anyone who intended to take a leave was to write an application which was approved 99% of the time (the 1% was only when too many people were taking holidays on the same or a similar period).

We used to file those applications but honestly tracking them was difficult.

The negative side of it was as follows:

We were not able to track contingency leaves - Many people just called up or texted their HOD about not coming because of some health issues. This used to go unreported, and hence it became difficult to determine the actual number of leaves availed (also we don't have a punch card system; we use traditional muster attendance).

People who seldom took leaves for genuine causes were not recognized because of not being able to track things down.

Certain people were able to enjoy as many as 30-40 paid leaves a year, while there were a few who never availed one and were never appreciated for it (lack of tracking).

The company was not able to punish frequent leave takers for two reasons:

a) No maximum leaves per year was declared.

b) As mentioned before, difficulty in tracking leaves.

As a result when I joined as HR here a couple of months back, I reframed and designed the leave policy to a maximum of X leaves per year.

Sure, people may take advantage of it, but once they know they'd be rewarded for not availing those leaves, they'd think before taking leaves on a casual note.

Hope it helped :)

Dear All,

Open Leave is a new concept I came across. I would like to know more about the open leave concept. Kindly share valuable information in this regard.

Dear all,

Open Leave is a new concept I have come across. I would like to know more about the open leave concept. Kindly share valuable information in this regard.

Dear Mansi, if you'd read the posts, I guess things are a little clearer. In addition, you can check the following:

A company implementing this policy and explaining the basics of it:
- [link no longer exists - removed]
- [And Now for Something Completely Different: TechTarget's 'Open Leave' Policy - Matt Kinsman - Blogs B2B @ FolioMag.com](http://www.foliomag.com/2008/and-now-something-completely-different-techtargets-open-leave-policy)
- [Open Leave Policy the Holiday of Holidays | Groonk[dot]Net](http://www.groonk.net/blog/2006/12/open-leave-policy-the-holiday-of-holidays)

Hope it helped :)