Types of Leave in India: A Complete HR Guide
Indian employers usually track five to seven leave types: casual leave (often 7 to 12 days a year), sick leave, earned or privilege leave (about 1 to 1.5 days per month worked, carried forward and encashable), maternity leave (26 weeks for the first two children), paternity leave (not centrally mandated) and compensatory off. State Shops and Establishments Acts set the legal minimums.
Most Indian employers track five to seven kinds of leave. The law sets minimums through state Shops and Establishments Acts, the Factories Act and the Maternity Benefit Act. Your policy can be more generous but not less.
The main leave types
| Leave type | What it is for | Typical practice |
|---|---|---|
| Casual leave | Short, often unplanned absences | 7 to 12 days a year, usually not encashable |
| Sick leave | Illness or medical needs | A medical certificate often needed after two or three days |
| Earned or privilege leave | Planned time off earned through service | About 1 to 1.5 days for each month worked, carried forward and often encashable at exit |
| Maternity leave | Childbirth and care | 26 weeks for the first two children and 12 weeks for a third, for eligible women |
| Paternity leave | Birth of a child | Not mandated by central law for private employers. Many offer 5 to 15 days |
| Compensatory off | Time off for work on a holiday or weekly off | Usually must be taken within 30 to 90 days |
What the law says
- ✓Under the Factories Act, an adult worker earns one day of leave for every 20 days worked.
- ✓The Maternity Benefit Act gives eligible women 26 weeks of paid leave for the first two children, and has provisions for adopting and commissioning mothers.
- ✓State acts set the minimums for casual, sick and festival leave. They vary, so check each state where you have staff.
Accrual and encashment
Leave should accrue automatically from the joining date and confirmation status, and both employee and manager should see the live balance. Encashment of unused earned leave at exit is commonly calculated on the last drawn basic salary, or basic plus DA, divided by 30. Mistakes in manual calculation are one of the most common causes of errors in final settlement.
Setting up your own policy
- Start with the legal minimum for each state.
- Add the leave types that suit your people, such as marriage leave or bereavement leave.
- Decide on carry-forward limits and encashment rules.
- Set how and when leave must be applied for.
- Put it in writing, in plain language, with a table.
Common problems
Different rules for different teams, balances tracked in separate spreadsheets and approvals done on chat. Each one creates disputes at the time of payroll.
Written by
HR Manager, Airwix Technologies (Sleet)
Nihit Dobariya is the HR Manager at Airwix Technologies in Ahmedabad, where he runs HR and payroll for the team behind Sleet. He writes about payroll, PF and ESIC, professional tax, the labour codes and everyday HR practice for Indian employers, and checks each rule against the official notification before it is published.
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