Leave Policy Template (India: CL, SL, EL & Maternity)

A leave policy defines how, when, and how much leave employees get. Indian leave is a mix of statute and company policy. The Shop & Establishment Act of each state mandates earned leave minimums, while CL, SL, and bereavement leave are largely policy-driven. A well-written policy avoids 80% of leave disputes.

What a Leave Policy must include

  • Types of leave and entitlement per type
  • Accrual schedule (monthly vs annual)
  • Carry-forward and encashment rules
  • Application and approval process
  • Notice period for planned leave
  • Documentation for sick / maternity leave
  • National + festival holidays
  • Special leaves (bereavement, marriage)
  • Maternity and paternity leave
  • Lapse / forfeiture rules

Drafting tips

  • Cross-check earned-leave minimums against your state Shop & Establishment Act. Karnataka requires 1 EL per 20 days worked, Maharashtra is 5 days for every 60 days, and so on.
  • Define a clear backup-coverage rule for leaves longer than 5 days to reduce manager friction.
  • Calendar all the national + festival holidays for the year by 31 December. Surprise holiday lists annoy employees more than reduced leave.

Leave Policy format

[Company Name] LEAVE POLICY. Effective [DD MMM YYYY]

1. SCOPE
This policy applies to all permanent employees of [Company Name] in India.

2. LEAVE TYPES & ENTITLEMENT

  Casual Leave (CL):     [6] days/year. Accrued monthly. Lapses on 31 December.
  Sick Leave (SL):       [6] days/year. Accrued monthly. Medical certificate required for >2 consecutive days.
  Earned Leave (EL):     [12] days/year. Accrued monthly. Carry-forward up to [30] days. Encashable at exit.
  National Holidays:     [3] (Republic Day, Independence Day, Gandhi Jayanti).
  Festival Holidays:     [9] floating, per annual list.

  Maternity Leave:       [26] weeks for first/second child, [12] weeks for third onwards. (Maternity Benefit Act 1961.)
  Paternity Leave:       [10] working days, within 6 months of childbirth.
  Bereavement Leave:     [3] days for immediate family (parent, spouse, child, sibling).
  Marriage Leave:        [5] days, once during employment.

3. APPROVAL PROCESS
  • Apply via the HR portal at least [3] working days before planned leave (CL, EL).
  • Sick leave: notify manager within 2 hours of shift start; submit medical certificate on return for absences >2 days.
  • Manager approves within 1 working day; HR records the leave balance.

4. LEAVE WITHOUT PAY (LOP)
If approved leave exceeds the employee's balance, days beyond will be marked as LOP. LOP days reduce monthly salary on a pro-rata basis (Basic + DA + allowances).

5. ENCASHMENT
Earned Leave is encashable at exit only, on Basic + DA, computed as (Basic + DA) ÷ 30 × unused EL days. CL and SL are not encashable.

6. CARRY-FORWARD
EL: up to [30] days carry forward; excess lapses unless encashed. CL and SL: lapse on 31 December.

7. STATUTORY REFERENCES
Earned leave per the [State] Shop & Establishment Act. Maternity leave per the Maternity Benefit Act, 1961. POSH leave under the POSH Act, 2013 where applicable.

8. AMENDMENT
The Company may amend this policy with reasonable notice. Updates effective from the date of communication.

Acknowledged:

Signature: ____________________   Date: __________
[Employee Name, Employee ID]

FAQs

How many leaves does an Indian employee legally get?

Each state Shop & Establishment Act sets a minimum earned leave (typically 12–21 days/year). CL and SL are not statutorily required but are universal in practice.

Is maternity leave 26 weeks for everyone?

Yes for first and second child under the Maternity Benefit Act 1961. For third child onward, it is 12 weeks. Adoption gets 12 weeks. Surrogacy (commissioning mother) gets 12 weeks.

Can earned leave be encashed every year?

Depends on company policy. Statute does not require annual encashment; most companies encash only at exit, with carry-forward limits.