"What! Is it already December?" is too common a thought.
But, if you put your ear close to the head of an experienced HR Manager, you will hear the clicks and whirrs of the machinery that starts working when triggered by the thought of this being the year-end.
Along with many year-end activities related to leave management, you must also decide the companys public holiday list. If your business operates in multiple states, you need to do this for as many states.
This complete guide explains everything you need to know when preparing the final list of holidays.
Table of Contents
- 1. Need For Declaring Holiday Lists
- 2. Decision Factors
- 3. Restricted/Optional Holidays
- 4. 10 Steps To Prepare A Holiday List
- 5. Central & State Laws For Public Holidays
Need For Declaring Holiday Lists
The central and state governments have laws for organizations to declare public holidays for their employees. Employers must provide a certain number of public holidays every year to their workforce. While a state government may declare 25 holidays for a year, you need to pick and choose 8, 10, or 14 holidays for your business, depending on your location. What will these be? To decide, you need to consider many factors and stakeholders.
Decision Factors
When it comes to finalizing a holiday list for your company, there are four key factors to consider:
- State
- Employer policies
- Employee demographics & preferences
- Customer demographics
State
The state in which your company operates is a crucial factor in arriving at the holiday list.
You should first obtain information on the Central and State governments’ public holidays, which declare their public holidays during Oct-Nov each year. This list is notified in their gazette first, and then it is published in local/national newspapers. It is easy to find the list of public holidays through newspapers and government/other reliable websites.
Apart from the official holidays, the state also decides the total number of holidays you should declare for your company. This number varies from 8 to 14 holidays per year. For example, in Karnataka, you must provide ten holidays per year. If your company operates in multiple states, you will need to repeat this work for each state.
Employer Policies
Every business is different, and so are the people who own or manage the business. As a result, policies vary a lot from company to company. A company's policy depends on its outlook, values, and culture.
Many companies are concerned about work disruption and revenue impact due to too many holidays. In this case, the company may try to either minimize the number of holidays or long weekends. While most companies may get away with unilateral policies without considering employee sentiment, it will not work in industries where skilled people are in high demand.
Here are some dimensions to consider:
Net vs. Gross
Many companies avoid declaring public holidays that fall on weekends like a Saturday or a Sunday. This maximizes the number of holidays granted to employees. The effective (net) holidays, in this case, are the same as the declared (gross) holidays.
A lot more companies declare holidays that fall on Saturday or Sunday. A good reason for this practice is that the spirit of celebration is independent of the day on which the holiday falls. But it's also a means to reduce the number of actual holidays an employee can avail. Here, the effective holidays are lower than the declared holidays.
Of course, there is always the option of balancing the concerns and taking the middle path.
Work Time vs. Family Time
Companies that can afford to have a prolonged shutdown due to extended weekends may decide not to declare those holidays if it's possible to do so. They may also have policies to disallow clubbing and covering discretionary leave with such holidays.
On the other extreme, companies may go out of the way to pamper their employees and create maximum opportunities for employees to have more fun and family time. They may choose to declare holidays that lead to long weekends for their employees.
For most companies, however, a balanced approach without going to either extreme is what works.
Employee demographics and preferences
Since the holidays are a means for employees to celebrate or observe essential occasions, your current employee demographics are crucial. Circulating a draft list or asking for suggestions can help you arrive at a good list quickly while ensuring employee satisfaction.
Customer demographics
If you have local customers, the holidays you declare mostly coincide with the customer's holidays. But, if you have many international or out-of-state customers, you also need to keep the holidays relevant to them in mind.
Restricted/Optional Holidays
If you ask all your employees to choose the holidays they would like on the list, you may end up with a very long list. Restricted holidays are a means to keep everyone happy without shutting down the business for too many days.
What is a restricted holiday?
A restricted holiday is an optional public holiday that employees who are celebrating the occasion can avail of. It's called 'restricted' because it applies to only a particular set of employees. This is in contrast to a general holiday during which the entire office or factory shuts down.
A restricted holiday helps the company run its business and serve its customers, albeit with fewer people. Employees get the flexibility to claim paid leave of absence on 2 or 3 restricted holidays during the year. These days must be from the list of holidays marked as optional and are valid only for that specific day.
By utilizing restricted holidays, we can declare a long list of holidays and cater to our employees’ needs.
10 Steps To Prepare A Holiday List
Gather Your Inputs
Prepare a draft list of holidays based on the last three years’ data by mid-November of the current year. Check with HR Managers of other companies about their plans as well.
Collect information about the public holidays declared by your state government and central government from reliable sources by the end of November.
For a new location/company, conduct a detailed study of the prevailing industry practices in that location while deciding on the list of public holidays to be granted there.
If your company policy favors Family Time, explore the possibility of tagging holidays to preceding or succeeding days of weekends so that employees can have longer holidays.
If your company policy favors Work Time, avoid picking too many holidays that fall on either side of a weekend (Fridays and Mondays). You may be out of luck in case of national holidays or major holidays like Diwali.
Get Draft Proposal Reviewed & Approved
Propose a list for the next calendar year (January-December) and the details of the last three years (includes the current calendar year).
Ensure that the proposal details include the title of the holiday, the date of the holiday, the day of the holiday, and remarks (if any). If you want to change any element of the practice, you should provide logic and supporting information.
Obtain final approval of your management and keep the approved copy (soft/hard) as a record for reference and internal/external audit.
Publish & Communicate
Communicate suitably to the employees latest by December 31st and clarify upfront whenever there is a departure from the past practice. This communication is essential, especially if the company observes January 1st as a holiday.
Permanently display a list of approved public holidays of the company at appropriate locations, including employee self-service portals. Provide a copy of your company’s holiday list(s) to the competent authorities under applicable statutes.
Central & State Laws For Public Holidays
What is a public holiday?
A public holiday, or national holiday, or legal holiday is established by law and is usually a non-working day during the year. Deciding which public holidays to hand out as a holiday for employees is an essential task for an HR manager in every company. Public holidays are linked to local festivities, events of historical significance, and linguistic demographics. These holidays are declared on a calendar-year basis.
The various actions governing public holidays in India are:
- The Industrial Employment (Standing Orders) Act – 1946
- The Negotiable Instruments Act – 1881
- The National and Festival Holidays Act – 1963
- The Weekly Holidays Act – 1942
- The Shops and Commercial Establishments Act
- The Companies Act - 2013
Many of these acts are state-level statutes. For example, every state has its Shops and Establishments Act.
Mandatory Holidays
The three national public holidays in India, which are mandatory, are:
- Republic Day (January 26th)
- Independence Day (August 15th)
- Gandhi Jayanti (October 2nd)
In a few states, even Labor Day or International Workers’ Day (May 1st) is a compulsory holiday.
These days, all companies, irrespective of laws governing them and the nature of ownership (public or private), should generally remain closed. If the nature of operations doesn’t permit closure on any public holiday, relevant statutes provide remedies such as additional compensation/wages or compensatory leave based on the category of employment.
Regional Holidays
Declaration of public holidays depends on the concerned states and establishments/companies’ discretion for public holidays other than national ones. As mentioned earlier, the number of public holidays differ from state to state depending on local festivities. These are also known as ‘regional’ holidays.
