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Every organization needs a leave policy that is tailored to its need and culture. There are also statutory rules from the government that need to be taken into consideration. A good leave policy is simple, easy to administer, fair to all parties and compliant with the statutory requirements. Employees need to be made aware of the Leave Policy. HR has to ensure that the same should be accessible to them when they want to check for availing of any leave.

A leave policy has the following components:

  • Different leave types which an employee can avail
  • Various rules for each of the leave types
  • Weekend policy
  • Holidays list

Some organizations may have different sets of policies for different classes of employees. For example, trainees, probationers or contract workers may have policies different from permanent staff. Or else, this could differ on employee levels or grade. In such situations, multiple leave schemes have to be devised with different policies.

Labor laws set the framework for deciding various dimensions of leave such as leave types, eligibility or duration. On top of this, company-specific rules based on the nature and type of work are included. Most companies have explicit rules that control how the employees leaves are earned and how they are utilized. The whole set of rules can be termed as a leave policy.

Leave Types

Organizations have the following types of leave apart from general holidays:

  • Earned leave (EL, also called as privilege leave PL)
  • Sick leave (SL)
  • Casual leave (CL)
  • Leave without pay (LWP)
  • Maternity leave (ML)
  • Paternity leave
  • Compensatory Off

Apart from leave types (EL & SL) that are mandated by the labor laws, it is up to the organization to decide what types of leaves will be given to its employees. At one extreme, there are organizations that allow only those leaves that are required for statutory compliance and not a day more. At the other extreme, you may have organizations that have a one line policy that says "take leave whenever you need it!".

Most organizations fall somewhere in between these. HR needs to ensure that all leaves availed by the employee are tracked. They would also need to track leave cancellations done. 

Leave Rules

Once you have identified the types of leave an employee can take, you need to define various rules for each leave type. 

  • Grant/entitlement—quantum of leave to be granted, how often and when.
  • Availing rules—how often an employee can avail a leave, limits, restrictions, etc.
  • Eligibility—who is entitled to this type of leave.
  • Approvals—who can approve and approval limits.
  • Year end activity—carrying forward of leaves up to a maximum limit, lapses, etc.
  • Clubbing & covering rules for intervening weekends or holidays.
  • Encashment
  • For  Sick Leave, Maternity Leave, etc. additional documentation to be maintained. HR needs to ensure that all documents are available.

Weekend Policy

A weekend policy states the days when employees can take their weekly off. Again, there are labor laws that mandate the minimum requirements. Paid weekly offs are relevant for leave computation. 

  • 5 day week—Saturday and Sunday are off.
  • 6 day week—only Sunday is off.
  • Second Saturday off (apart from Sunday).
  • Alternate Saturday off (1st, 3rd, and 5th Saturdays are working in a month).

Holiday List

Every organization needs to declare a list of holidays for a given calendar year. This list may vary from one location to another and an organization may have multiple lists for their employees in different locations. Again the holiday list is important for leave computation. 

The statutory laws are diverse and vary from state to state and by industry type. You have the Factories Act for manufacturing industries, the Shops & Establishment Act for others and so on. It is recommended to seek out the advice of a labor law expert to be fully compliant with the statutory requirements for your industry.




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