When Indian firms consider debt, they usually look outward — at banks, collectors, or market liabilities. However Shubhranshu Kumar, Co-founder and CEO at Keeper, has flagged a hidden Rs 80,000 crore time bomb lurking inside steadiness sheets: cash owed to staff for unused paid depart.
In a LinkedIn publish, Kumar wrote, “A CFO I spoke to lately stated this quietly: ‘Go away legal responsibility is the one line merchandise in our books that grows even when nobody talks about it.’ He wasn’t unsuitable. In India, firms at this time owe ₹80,000 crore to their staff within the type of accrued, unused paid depart. Most of this sits idle. Unaccounted for in money move. Unplanned in forecasts. But totally payable – at full CTC.”
Explaining the explanations behind this swelling legal responsibility, he wrote, “Let’s have a look at what’s inflicting this: The common worker makes use of solely 67% of their allotted PTO. Most insurance policies permit 30-45 days of carry-forward depart. Wages have grown 6.5% year-over-year. Few firms monitor legal responsibility in actual time. Consequence? An ever-expanding, silent monetary obligation that surfaces solely throughout audits, exits, or when somebody from finance lastly decides to dig.”
“And right here’s what’s altering now: Gujarat is the primary state to inform the brand new labour code. This makes it necessary to money out earned depart past 30 days yearly. No lapsing. No deferring. What was as soon as passive danger is now a recurring legal responsibility,” he warned.
“CFOs — in case your depart legal responsibility graph seems to be something however flat, it is time to cease calling it a profit line. Begin calling it what it’s: Debt. With a due date,” he suggested.
Citing a real-life instance, Kumar added, “Final quarter, I used to be on a name with a CFO from a listed firm. He thought their depart legal responsibility was underneath management. We opened the HRMS collectively. ₹8.2 crore. All sitting as unused earned depart. Unpaid, however totally owed. And rising annually. Then I requested a easy query. ‘What occurs when this hits ₹10 crore? Or when the labour legal guidelines implement encashment?’ Silence. That is what we name the invisible debt lure.”
Warning firms to behave earlier than compliance forces their hand, Kumar concluded, “Go away is now not only a individuals difficulty. It’s a monetary publicity. And it’s time to get proactive about it. CFOs — in case your depart ledger is crossing ₹5 crore, you’re not alone. Let’s repair this earlier than compliance makes it pressing.”
Kumar’s publish rapidly went viral, drawing combined reactions and sparking debate.
“You’re basically proposing an entire transformation of India’s work tradition. The problem with depart insurance policies doesn’t originate on the prime stage, however reasonably on the grassroots. Whereas insurance policies could formally permit for depart, in actuality, staff usually discover their requests denied by their managers. I doubt any firm is daring sufficient to supply depart encashment as soon as an worker’s depart steadiness exceeds a sure threshold,” wrote one consumer.
One other commented, “Why cannot reserves be created each month for the variety of leaves apportioned per thirty days and it’ll go in P&L as worker bills. At any time when they take a depart add that again.”
