Leave Policy Format
A leave policy is a formal HR document that defines the types of leave available to employees, the eligibility and accrual rules for each, the approval process, and how unused leave is treated. It sets consistent expectations across the organisation and ensures compliance with applicable state labour laws.
In India, leave entitlements are influenced by the Shops and Establishments Act of the state in which the establishment operates (which varies in specifics), as well as central legislation like the Maternity Benefit Act, 1961, so companies typically draft one master policy while noting that certain minimums may vary by work location.
Leave Policy — sample format
Copy the template below and replace the [bracketed] fields.
1. Purpose and Scope
This policy defines the leave entitlements and procedures applicable to all employees of [Company Name] across [locations/entities]. It is designed to comply with applicable state Shops and Establishments regulations and other relevant labour laws, subject to location-specific minimums where they exceed this policy.
2. Types of Leave
2.1 Casual Leave (CL): [X] days per calendar year, for short personal needs, generally not carried forward.
2.2 Sick Leave (SL): [X] days per calendar year, for illness or medical needs; a medical certificate may be required for absences exceeding [X] consecutive days.
2.3 Earned/Privilege Leave (EL/PL): [X] days per year, accrued monthly/annually, which can generally be carried forward up to a maximum of [X] days and is eligible for encashment as per company policy.
2.4 Maternity Leave: As per the Maternity Benefit Act, 1961 (as amended in 2017), eligible women employees are entitled to 26 weeks of paid maternity leave for the first two children (12 weeks for the third child onward), along with other applicable entitlements.
2.5 Paternity Leave: [X] days, as per company policy (not currently mandated by central law).
2.6 Bereavement Leave: [X] days in the event of the death of an immediate family member.
2.7 Public Holidays: As per the holiday list published annually for each work location.
3. Eligibility and Accrual
Leave accrual begins from the date of joining. Employees on probation are eligible for [state policy, e.g. "casual and sick leave on a pro-rata basis; earned leave accrues but may only be availed after confirmation"].
4. Application and Approval Process
Leave requests must be submitted through [HR system/portal name] at least [X days] in advance for planned leave, and as soon as possible (with subsequent regularisation) for emergency or sick leave. Approval rests with the employee's reporting manager, subject to business requirements.
5. Leave Encashment and Lapse
Unused Earned Leave beyond the carry-forward limit will [lapse at year-end / be encashed], as per company policy. Casual and Sick Leave generally do not carry forward or get encashed unless stated otherwise.
6. Leave Without Pay (LWP)
Absences beyond available leave balance, or unapproved absence, will be treated as Leave Without Pay and processed as a salary deduction for the relevant period.
7. Policy Review
This policy is subject to periodic review and may be updated to remain compliant with applicable law or business needs. Any changes will be communicated to all employees.
What to include
- ✓ Leave type definitions — separates casual, sick, earned, maternity, paternity and bereavement leave with distinct rules for each
- ✓ Statutory maternity leave clause — explicitly references the Maternity Benefit Act, 1961 entitlement of 26 weeks for the first two children
- ✓ Accrual and probation clause — clarifies how leave builds up and whether probationary employees have restricted access
- ✓ Carry-forward and encashment rules — defines what happens to unused earned leave at year-end
- ✓ Leave without pay clause — sets consequences for absence beyond available balance, protecting payroll accuracy
Legal notes (India)
- § Leave entitlement minimums (especially for casual and earned/privilege leave) are prescribed by the state-specific Shops and Establishments Act applicable to each work location, and these vary by state — companies with a multi-state workforce should verify that this policy meets or exceeds the strictest applicable state minimum.
- § The Maternity Benefit Act, 1961 (as amended by the Maternity Benefit (Amendment) Act, 2017) mandates 26 weeks of paid maternity leave for the first two surviving children (12 weeks for the third child onward), and this is a central-law minimum that cannot be reduced by company policy.
- § There is currently no central statutory mandate for paid paternity leave in India, so any paternity leave clause in this policy is a company benefit, not a legal requirement, and can be defined at the employer's discretion.
Frequently asked questions
Is earned leave encashment mandatory in India?
Is maternity leave paid in full during the leave period?
Can a company set its own leave policy instead of following the Shops and Establishments Act?
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