Leave Policy Generator
Generate a leave policy covering earned, casual and sick leave, accrual, carry-forward, encashment and the application process — with the statutory floor stated explicitly rather than assumed.
Free · No sign-up · Nothing leaves your browser · Figures reviewed 22 September 2026
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Set to 0 for a use-it-or-lose-it policy.
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Still to fill, shown as [square brackets] below: Company name, Effective date, Policy owner
[COMPANY NAME] LEAVE POLICY Version: 1.0 Effective from: [Effective date] Owner: [Policy owner] Applies to: All employees ================================================================ 1. PURPOSE Time away from work is necessary, not a concession. This policy sets out the leave every employee is entitled to, how it is accrued and applied for, and how it interacts with the statutory minimum. 2. ENTITLEMENT Earned leave 18 days a year Casual leave 6 days a year Sick leave 6 days a year Bereavement leave 3 days per occurrence Total 30 days a year, excluding public holidays and weekly offs Leave accrues monthly, at 2.50 days a month, credited at the end of each completed month of service. Employees on probation accrue leave from their date of joining but may normally take it only after confirmation. Sick leave is available during probation. 3. STATUTORY POSITION The applicable Shops and Establishments Act, or the Factories Act where it applies, sets a minimum leave entitlement. Where the entitlement above is lower than that minimum in any respect, the statutory entitlement applies. Nothing in this policy reduces a statutory right. Maternity benefit, and any other statutory leave, is granted in accordance with the law and is not counted against the entitlements above. 4. APPLYING FOR LEAVE Leave must be applied for at least 3 days in advance and approved before it is taken. Approval is at the manager's discretion, taking account of workload and cover, and will not be unreasonably withheld. Sick leave is an exception. Notify your manager as early as possible on the first day of absence and apply in the system on your return. A medical certificate is required for absence of three consecutive days or more. Leave not applied for and approved is unauthorised absence and is treated under the attendance policy. 5. CARRY FORWARD Up to 30 days of unused earned leave may be carried into the next year. Anything above that lapses. Casual and sick leave do not carry forward. 6. ENCASHMENT Unused earned leave is encashed on leaving, calculated on basic salary plus dearness allowance. Encashment while in service is not permitted. 7. UNPAID LEAVE Unpaid leave may be granted at the company's discretion where paid leave is exhausted and there is good reason. It must be applied for in advance and approved by human resources as well as the manager. Continuous unpaid leave beyond 30 days may affect benefit accrual and the leave entitlement for the year. 8. LEAVE AND THE NOTICE PERIOD Leave may not be taken during the notice period except with written approval, because the notice period exists for handover. Accrued leave is not automatically set against notice. 9. ABUSE Leave taken on a false ground, or a medical certificate that is not genuine, is misconduct and is dealt with under the disciplinary procedure. REVIEW This policy is reviewed annually and whenever the law changes. Where anything in it falls below a statutory entitlement, the statute applies and this policy is to be read as amended accordingly. Questions about this policy should be raised with the human resources team at [Company name].
A starting point, not legal advice. Policies interact with your employment contracts and with the Shops and Establishments Act of every state you operate in — have this reviewed before you publish it.
A leave policy that does not mention the statutory position is routinely read as replacing it. It cannot: where a policy falls below the entitlement in the applicable Shops and Establishments Act, the statute applies.
That sentence is in the generated policy for a reason. So is the clause on what happens to leave during a notice period, which is the single most common leave dispute at exit.
The statutory floor
Leave entitlement in India comes from the Shops and Establishments Act of each state, or the Factories Act where that applies. The entitlements differ state by state — typically around one day of earned leave for every twenty days worked, plus casual and sick leave.
A policy cannot reduce them. Where you operate in several states, the practical answer is a single policy set at or above the most generous applicable floor, rather than a different policy per state.
The three decisions that cause disputes
Carry-forward. A cap is reasonable; no cap creates a balance-sheet liability that grows quietly. Say what happens to leave above the cap rather than letting people discover it in December.
Encashment. If you allow it on exit, say what it is calculated on — basic plus dearness allowance is the usual base, and a 26-day divisor produces a materially higher daily rate than a 30-day one.
Leave during notice. State the position explicitly. Employees generally assume accrued leave can be set against notice; most employers intend the opposite, and the argument surfaces at the worst possible moment.
Frequently asked questions
- How many leave days are mandatory in India?
- It depends on the state. Leave entitlement comes from each state's Shops and Establishments Act, or the Factories Act, and typically works out to around one day of earned leave for every twenty days worked, plus casual and sick leave. There is no single national figure.
- Can a company refuse to carry forward leave?
- It can cap or disallow carry-forward by policy, provided the underlying statutory entitlement is granted. State the cap clearly and remind people before the year end.
- Can leave be adjusted against the notice period?
- Only if the policy or contract allows it. It is a policy question, not a statutory right, and many employers refuse because the notice period exists for handover.
- Is sick leave required to be paid in India?
- Most state Shops and Establishments Acts provide for a number of paid sick days, and employees covered by ESI have a separate sickness benefit through ESIC. Check your state's provision before setting the figure.
About this tool
Built by the ViniOffice team. Figures and rules last reviewed 22 September 2026 against the statutory reference this team maintains. Indian statutory rates are date-effective and change by notification — confirm against the current one before running payroll or filing. A starting point, not legal advice. Policies interact with your employment contracts and with the Shops and Establishments Act of every state you operate in — have this reviewed before you publish it.
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