Few HR topics cause as many questions as leave. How many days do I get? Can I carry them forward? Will unused leave be paid out? Why did my colleague's request get approved when mine didn't?
A clear leave policy answers these questions before they're asked. It gives employees the time off they need, keeps your business running smoothly and makes sure you follow the law.
This guide explains how to build a leave policy that's fair to employees and easy for HR and managers to run, from choosing leave types to setting rules, meeting legal requirements and managing it all day to day.
| Leave type | Purpose | Common practice |
|---|---|---|
| Earned or privilege leave (EL/PL) | Planned time off such as holidays | 12 to 21 days a year, often accrued monthly, can usually be carried forward |
| Casual leave (CL) | Short, unplanned personal needs | 6 to 12 days a year, usually not carried forward |
| Sick leave (SL) | Illness or medical appointments | 6 to 12 days a year, medical certificate for longer absences |
| Public and festival holidays | National and regional holidays | 3 national holidays plus festival holidays set by state rules |
| Maternity leave | Childbirth and recovery | Up to 26 weeks of paid leave for eligible employees |
| Paternity leave | Supporting a new child | Not mandatory in the private sector, but commonly 5 to 15 days |
| Adoption leave | Adopting a child | Up to 12 weeks for adopting mothers of a child under three months |
| Bereavement leave | Death of a family member | 3 to 5 days |
| Compensatory off | Working on a holiday or weekly off | One day off for each day worked |
| Leave without pay (LOP) | When paid leave is exhausted | Salary deducted for the days taken |
You don't need every type. Choose the ones that fit your team, your industry and the law in your state.
Leave in India is governed by a mix of central and state laws. Your policy must meet at least the minimum they set.
Shops and Establishments Acts: Each state has its own act for offices, shops and commercial establishments. These set minimum earned, casual and sick leave, along with rules on carry-forward, encashment, weekly offs and holidays. The rules vary noticeably from state to state.
The OSH Code: The Occupational Safety, Health and Working Conditions Code, in force since November 2025, covers factories and many other establishments. Workers become eligible for annual leave with wages after 180 days of work in a year, earning one day of leave for every 20 days worked. Leave can be carried forward up to a set limit and unused leave can be encashed.
The Code on Social Security: This covers maternity benefit, including up to 26 weeks of paid maternity leave for eligible women, 12 weeks for adopting and commissioning mothers and leave for miscarriage.
National and festival holidays: Republic Day, Independence Day and Gandhi Jayanti are compulsory paid holidays across India. States also require a set number of festival holidays.
Because requirements vary by state and are changing under the new codes, check the rules for every state where you have employees.
A leave policy works only if the rules are clear. Decide each of these upfront and write them down.
Here's a simple structure a small or mid-sized company could start from. Adjust the numbers to meet the rules in your state.
| Leave type | Entitlement | Accrual | Carry-forward | Encashment |
|---|---|---|---|---|
| Earned leave | 18 days a year | 1.5 days per month | Up to 30 days | At exit, on basic pay |
| Casual leave | 8 days a year | Credited at the start of the year | Lapses at year-end | No |
| Sick leave | 8 days a year | Credited at the start of the year | Up to 24 days | No |
| Public holidays | 10 to 12 days a year | Published at the start of the year | Not applicable | Not applicable |
| Maternity leave | Up to 26 weeks | As per law | Not applicable | No |
| Paternity leave | 10 days | Per child | Not applicable | No |
| Bereavement leave | 5 days | Per event | Not applicable | No |
| Compensatory off | 1 day per holiday worked | On approval | Use within 60 days | No |
Your written policy should also cover eligibility, how to apply, approval timelines, documentation and what happens when leave runs out.
A fair policy is one employees trust. That comes from consistency, clarity and recognizing that people's needs differ.
Even the best-written policy fails if it's hard to run. These steps keep leave management simple.
With Mocha HRMS, your leave policy runs itself and employees always know where they stand.
A good leave policy is clear, legally compliant, fair to every employee and simple to run. Choose the right leave types, define your rules upfront, meet your state's requirements and use a system that handles the day-to-day work.
Leave laws vary by state and are changing under the new labour codes, so review your policy with an HR or legal advisor at least once a year.
Ready to take the hassle out of leave management? Book a free demo of Mocha HRMS.
It depends on state law and company policy, but a common total is 30 to 40 days a year, including earned, casual and sick leave plus public holidays.
For earned leave, many state laws and the OSH Code require encashment of unused leave in certain situations, such as at exit. Check the rules for your state.
It's up to the company, subject to state law. Many companies allow casual and sick leave during probation and earned leave after confirmation.
Not for private companies under current law, but many employers offer it to attract and keep talent.
It's a policy where weekends or holidays falling between leave days are counted as leave. Companies can choose whether to apply it and should state it clearly.