A Quick Guide to Leave Rules in India

A Quick Guide to Leave Rules in India

by Paresh Bramhane

What if your employees take an unprecedented leave without informing you? What about work? What about deadlines? What about deliverables?

Delayed work. Unaccomplished milestones. And unwanted pressure.

Isn’t it? 

Like the HR and payroll software go hand-in-hand, similarly, as a business, you need to lay down the ground rules for your employees so that you both can mutually benefit without breaking the work cycle.

For this, you need to lay down a leave policy that enables smoother business functioning for you.

To structure the leave policy, you need to know the foundation of the leave rules to help you create this structure.

So, let’s start by understanding the different types of leaves that your employee can claim:

Types of Leaves-

Sick Leave

Sick leave is a boon to your employees to recover from a particular illness. This leave is given to employees on the grounds of sickness or in case of an accident. An employer can seek a medical certificate for such leaves if their leave exceeds 2 to 3 days.

Casual Leave

Urgent situations can occur at any time — have to get your electric settings sorted? Or your mother is unwell, and you need to take her for a medical check. Take a leave.  

That’s what a casual leave helps you cover.

Casual leave is provided to cover unforeseen or urgent situations. The employee in any company can take 8-15 days of casual leaves in a year. 

Compensatory-Off

This is a case-to-case leave given to employees who have worked on a holiday or weekend to complete the deliverable on time. 

When the employee prioritizes the deliverables on the days of a holiday, they are granted a leave on the weekday to fulfill their off-day.

The employee has to claim the compensation after having worked during the weekend. Requests for the leave are forwarded by the manager and approved by HR.

These compensation-off leaves come with an expiry period of 4 to 8 weeks and should be used within this period.

Maternity Leave

Maternity Leave applies to women employees of the company to provide them with paid leave for 26 weeks. This leave applies to any woman employee who has worked at least 80 days in the 12 months preceding the delivery date.

This leave applies only to the first two children. For the third child, the women employees can claim a leave for 12 weeks.

Under this act, the woman employee can claim her benefits in case of unforeseen situations during her maternity leave like miscarriage, surrogacy, adoption, and tubectomy.

Paternity Leave

This leave applies to the male employees after their child is born. This leave is offered so the fathers can take care of their newborn child along with their mother. 

Many modern companies provide paternity leaves to their male employees. The leave entitlement for this varies from 2 to 4 weeks, depending on the employers’ policies. However, there is no need to provide paternal leave according to India’s labor laws.

If a company provides the leave, an employee can claim it only under a certain period — within 8 weeks of the baby’s birth.

Bereavement Leave

Bereavement leave, also called compassionate leave, is given to employees when there is death in the family. This leave aims to perform the last rites and take care of personal matters. This leave is granted for 2 to 20 days.

This leave is not mandatory in India but is being offered by many progressive companies. 

Marriage Leave

This leave applies to employees to get married. Although this leave is mandatory in many countries, it is not a legal leave in India. 

The marriage leave is granted for 1 to 15 days. However, most companies grant a 3-day leave.

To claim a marriage leave, the employees need their wedding invitation card or a marriage certificate as documentary proof for the approval of the leave. 

Earned Leave

An earned leave is also called a vacation leave or privilege leave which helps employees to take rest from work. These leaves can be taken for a long rest and hence, need to be pre-planned for both the employee and the employer.

The leave entitlement for an earned leave is calculated based on the number of days worked — 20 days — excluding the weekend holidays and the days when an employee does not work.

According to labor laws, an earned leave is mandatory. These leaves can be converted into cash if not claimed by the employee until the end of the year.

When an employee encashes their earned leave, it is called leave encashment.

If the employee does not encash their earned leave, the leave balance is carried forward to the following year. Though these leaves are carried forward, the quantum of the leaves to be carried forward is decided by the State laws.

Leave Without Pay

When the employee has used all the leaves but still requires taking a leave, in such a case, they are granted a leave without pay. This leave is also called unpaid leave or loss of pay since the employee does not earn through this leave. 

Any leave outside the total number of leaves per year results in a pay-cut for the employee. So, mention the total number of leaves the employee has and how much the pay-cut is per day leave outside the paid leaves.

What are Leave Rules?

Once you have identified the type of leaves your employee can take, you need to define the parameters for each leave type.

  • Grant/Entitlement

First, look at how often you will grant them the leave and when. You could grant the leaves on a monthly, quarterly, half-yearly or annual basis. The popular ones among these are the monthly or yearly grants.

When you grant annual leave lump-sum at the beginning of the year, employees can avail it throughout the year, and it is credited into their account on a monthly basis. 

  • Availing Rules

Identify how often the employee can take leave and the limits and restrictions to taking the leave.

  • Eligibility

Determine who is eligible for which leave type.

  • Approvals

Decide who can approve the leaves and what are the limits to approval.

  • Clubbing & Covering

Decide the rules for intervening holidays or weekends.

  • Encashment

Decide what types of leaves can be termed as earned leaves, the limits and salary components on which the leave can be encashed.

  • Year-end-activity

Decide the leave types that can be carried forward to next year and what are the maximum limits and lapses of these leaves that can be carried forward.

What are the rules for granting leaves?

You need to consider:

  • Number of leaves granted every year
  • Frequency of granting the leaves (monthly, quarterly, or annually)
  • The expiry period for granting the leave
  • Eligibility for granting the leave
  • Top-up leave grants
  • Distribution of the leaves

How many leaves are allowed in a year?

Every company provides 12 earned leaves for 240 working days in a year. Outside this, the employee can claim unpaid leaves.

Is leave policy mandatory in India?

Yes, a leave policy lays down the rules and regulations related to each leave type. This helps the employee and employer stay on the same page regarding professionalism and work culture. 

Hear us out..

A good leave policy helps you and your employees understand the ground rules for the leaves they take. While every employee must take 12 paid leaves every year, they can take extra leaves outside the eligibility criteria. 

While they can claim extra leaves, these leaves are unpaid and liable to a pay-cut in their salary. Ensure that you mention the per day pay-cut on these extra leaves to them.

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