State-wise Leave Policies in India — Framework & Types
Employee leave entitlements in India are not uniform — they are largely governed by state-specific Shops & Establishments Acts (for shops/offices) and the Factories Act (for factories), so the number of leave days can differ from state to state. This guide explains the leave framework and why it varies. (Always check your state’s Act and any labour-code changes for exact figures.)
Which laws govern leave?
- State Shops & Establishments Act — governs leave for employees in shops, commercial establishments and offices; each state has its own Act with its own leave provisions.
- Factories Act, 1948 — governs annual leave with wages for factory workers (broadly one day of earned leave for every 20 days worked for adults).
- Maternity Benefit Act — a central law providing paid maternity leave.
Common types of leave
- Earned / Privilege leave (EL/PL): annual paid leave that usually accrues based on days worked and is often carry-forwardable/encashable within limits.
- Casual leave (CL): short-notice leave for personal reasons.
- Sick leave (SL): leave for illness (sometimes combined with casual leave depending on the state).
- National & festival holidays: declared holidays (e.g., Republic Day, Independence Day, Gandhi Jayanti) plus state festival holidays.
- Maternity (and increasingly paternity) leave per applicable law/company policy.
Why it varies by state
Because Shops & Establishments is a state subject, the exact number of earned/casual/sick leave days, accrual rules, and encashment differ between states. A company operating in multiple states should frame its leave policy to meet the most generous applicable statutory minimum in each location, then standardise upward where practical.
Building a compliant leave policy
Document leave types, accrual, carry-forward, encashment, holiday list, and approval process in your HR policy, aligned to each state’s statutory minimum. TAXAJ helps with payroll & HR and HR documentation.
Frequently asked questions
Are leave rules the same across India?
No — leave is largely governed by state Shops & Establishments Acts (and the Factories Act), so entitlements vary by state.
What types of leave are common?
Earned/privilege leave, casual leave, sick leave and national/festival holidays, plus maternity leave under central law.
How should a multi-state employer set leave policy?
Meet the statutory minimum of each state where you operate, and standardise upward for consistency.
Setting up HR & payroll? TAXAJ drafts compliant leave policies and runs payroll across states. Sort your HR with TAXAJ →
Related guides: Payroll & HR · Part-time employment contracts · HR templates
