Types of leave in India: what the law requires

"How many leaves are we legally required to give" is the question every founder asks when writing the first leave policy, and the honest answer is "it depends on your state". There is no single central number for an office or a shop. The minimums come from the Shops and Establishments Act of the state where the establishment is registered, with factories under the Factories Act and now the Occupational Safety, Health and Working Conditions Code, and maternity under a central law that applies everywhere. This guide walks through each leave type, where its rules come from, and what a typical private company grants on top.

Earned leave (also called privilege or annual leave)

The leave an employee accrues by working. The common statutory formula is one day of leave for every twenty days worked, which is what the Factories Act and the OSH Code provide, and what several state Shops and Establishments Acts copy. Maharashtra's 2017 Act, for example, grants one day for every twenty days worked in the previous year to anyone who worked 240 days, with accumulation capped at 45 days. Karnataka's Act uses the same one-in-twenty rate with carry-forward permitted up to 45 days.

In practice, private companies grant a flat 15 to 21 days a year, accruing monthly, carry forward up to a cap, and encash the excess or the balance at exit. Encashment at exit is a statutory expectation in most states; the tax treatment is covered in our guide to leave encashment rules and tax.

Casual leave

Short, often unplanned leave for personal matters. Statutory provision varies: Maharashtra mandates eight days a year, credited quarterly and lapsing at year end; Karnataka requires twelve days of combined casual and sick leave. Companies typically grant 6 to 12 days, non-accumulating, with a rule against clubbing it with earned leave.

Sick leave

Leave for illness, usually with a medical certificate required beyond two or three consecutive days. Some states mandate it separately, some fold it into a combined pool with casual leave, and some leave it to the employer. The common private-sector grant is 6 to 12 days a year, with a few companies allowing a small carry-forward for genuine medical contingencies. Employees covered by ESI have sickness benefit under that scheme as well.

Maternity leave

The one leave type with a uniform central rule, originally under the Maternity Benefit Act and now carried into the Code on Social Security. A woman who has worked for at least 80 days in the twelve months before the expected delivery is entitled to 26 weeks of paid maternity leave for the first two children, and 12 weeks from the third child onward. Adopting mothers and commissioning mothers get 12 weeks. Establishments with 50 or more employees must provide a creche facility. The benefit is payable at the average daily wage, and dismissing a woman during or because of maternity leave is unlawful.

Small companies sometimes assume the law applies only above a headcount threshold. It applies to every establishment with ten or more employees, and the spirit of it should apply below that too.

Paternity leave

There is no central mandate for private employers. Government employees get 15 days; private companies that offer it typically give 5 to 15 days. It is cheap, rarely abused, and a visible marker of a decent workplace.

Compensatory off

Leave granted in lieu of working on a weekly off or a holiday. The Shops and Establishments Acts generally require a substitute day off when an employee works on a weekly holiday. Write down the window within which comp-off must be taken (30 to 60 days is common) and whether it needs manager approval at the time of the extra work, because retrospective comp-off claims are a reliable source of attendance disputes.

Public and restricted holidays

Each state notifies a list of public holidays, and the Shops and Establishments Acts require a minimum number of paid holidays, commonly including Republic Day, Independence Day and Gandhi Jayanti. Most companies publish 10 to 12 fixed holidays and let employees pick 2 or 3 from a longer restricted list; our post on restricted holidays explains the mechanics.

Other leave types

• Bereavement leave: no mandate; 3 to 5 days is common and should be granted without friction.
• Marriage leave: no mandate; some companies grant 3 to 5 days once.
• Study or sabbatical leave: discretionary, usually unpaid.
• Loss of pay: not a leave type but the result of absence beyond balances. Record the days on the payslip.
• Menstrual leave: no central mandate; a few states and companies provide it.

Summary

Writing it into policy

Check the Shops and Establishments Act for every state you have an office in, take the higher of the statutory minimum and your intended grant, and write the result into one policy with accrual, carry-forward, encashment and approval rules. Our guide to a leave policy that works in India covers the design choices. Then configure the same rules in the leave system, so balances are visible and the policy enforces itself.

This article describes common practice and general legal provisions, not legal advice. State rules differ and are amended; confirm the figures for your establishment with a professional.