Types of Leaves Offered by Companies

What are leaves?

A leave is a paid or unpaid absence from work, granted for reasons ranging from illness to a family emergency to simple rest. In India, leave falls into two broad buckets: statutory leave, which a central or state law requires an employer to grant, and company-granted leave, which exists purely because an employer’s own policy offers it. Casual, sick, and earned leave typically have a statutory floor; things like sabbatical, floater, and marriage leave exist only if your company’s policy says so.

The mix matters more than it used to. 80% of employees say they’d choose a well-defined leave policy over a bigger paycheck, and getting the statutory floor wrong isn’t just a morale problem, it’s a compliance one.

Leave types comparison table

A quick reference before the detail below. CL, SL, EL, and PL come up so often as acronyms that it’s worth having them side by side.

Types of leave in India

The specific duration and terms for each of these vary by company policy and, for the statutory ones, by industry and state. Here’s what each is for.

Earned leave / privilege leave (EL/PL)

Earned Leave, also called Privilege Leave, is paid time off that accrues as an employee works, usually building up month by month rather than being granted all at once. It’s meant for planned time away: a vacation, a family event, or simply a break to recharge. Most companies allow unused earned leave to carry forward into the next year up to a cap, and many allow it to be encashed, paid out in cash, when it’s not used or when the employee leaves.

Casual leave (CL)

Casual leave covers short, often unplanned absences, a family matter, an appointment, or a sudden personal emergency, without needing to draw on sick or earned leave. It typically doesn’t carry forward and lapses at year-end if unused.

Sick leave / medical leave (SL)

Sick leave lets employees recover from illness or injury without losing pay, and often requires a medical certificate beyond a short threshold. It exists as much to protect the rest of the team from a contagious illness spreading through the office as it does to protect the employee taking it.

Maternity leave

Maternity leave gives a woman time off before and after childbirth. Female employees are entitled to up to 26 weeks of paid leave for their first two children, reducing to 12 weeks for a third child onward, a provision that continues under current law even though the statute that originally granted it has since been folded into a broader code (more on that below).

Paternity leave

Paternity leave lets a father or partner take time off to be present for a birth or adoption. Unlike maternity leave, it isn’t a right guaranteed by a private-sector statute in India, it exists because a company’s policy grants it, typically somewhere between five and fifteen days.

Adoption leave

Adoption leave mirrors maternity leave for adoptive parents. A woman adopting a child under three months old is entitled to 12 weeks, covering both the transition period and early bonding time, and it can be taken before or after the adoption is finalized.

Bereavement leave

Bereavement leave, sometimes called grief leave, gives an employee time to grieve, attend a funeral, and handle the practical matters that follow the death of a close family member, without it eating into casual or sick leave.

Compassionate leave

Compassionate leave covers a broader personal or family crisis than bereavement alone, a loved one’s serious illness, for instance, where the employee needs time to provide support or manage urgent arrangements.

Compensatory off (comp-off)

Comp-off, or time off in lieu, compensates an employee for hours worked beyond their normal schedule with an equivalent day off later, rather than overtime pay. Most policies require it to be used within a short window, often 30 to 90 days, or it lapses.

Floater leave

Floater leave, sometimes called a floating holiday, lets employees take a day off for a personal or religious occasion that isn’t on the company’s fixed holiday calendar, useful in a workforce that doesn’t all observe the same festivals.

Marriage leave

Marriage leave covers time off for an employee’s own wedding or, in some company policies, a close family member’s. It’s entirely policy-driven, so the duration and any supporting documentation required vary company to company.

Sabbatical leave

Sabbatical leave is an extended break, usually after several years of service, for further study, research, or personal reasons. It can be fully paid, partially paid, or unpaid depending on the company, and it’s planned well in advance rather than taken on short notice.

Leave without pay (LWP/LOP)

LWP, or Loss of Pay, applies once an employee has exhausted their paid leave balance but still needs time off. Salary is reduced proportionately for the days taken, and it’s typically a last resort rather than a first choice.

Menstrual leave

Menstrual leave, offered by a small but growing number of Indian companies and piloted in policy form by a few state governments, gives employees one or two paid days off per cycle for menstrual pain or discomfort. It isn’t a nationwide statutory entitlement yet, so where it exists, it’s because a company or a specific state scheme has chosen to offer it.

Types of leave under Indian labour law

The most important update here: the statutes that historically granted these entitlements have themselves been restructured. As part of India’s four new labour codes, effective November 21, 2025, the Factories Act, 1948 was consolidated into the Occupational Safety, Health and Working Conditions Code, 2020, and the Maternity Benefit Act, 1961 was consolidated into the Code on Social Security, 2020. The entitlements below continue to apply in substance under the new codes; only the statute you’d cite for them has changed.

Note the paternity row: a Paternity Benefit Bill was introduced in Parliament in 2017 but was never passed into law, so unlike maternity leave, there’s no central statute guaranteeing it in the private sector. Any paternity leave a private employer offers is a policy choice, not a legal floor.

Shops and Establishments Acts are state legislation, so they sit outside the central labour codes entirely; Karnataka, Maharashtra, and Delhi each set their own earned-leave accrual rates and eligibility rules, and it’s worth checking the specific state’s act rather than assuming a national standard.

Leave carry forward and encashment rules

Not every leave type behaves the same way at year-end. Earned or privilege leave is the one most companies let employees carry forward, often up to a cap like 30 or 45 days, beyond which it either lapses or gets auto-encashed. Casual leave almost never carries forward; it resets or lapses each year. Sick leave sits in between, some companies let a portion carry forward, most don’t.

Encashment, converting unused earned leave into a cash payout, usually happens at year-end for the portion above the carry-forward cap, or in full when an employee exits. Tax treatment differs by timing: leave encashed while still employed is fully taxable as salary, while leave encashed at retirement or resignation is exempt under Section 10(10AA) of the Income Tax Act, up to the lowest of the actual amount received, the cash value of unused leave, ten months’ average salary, or a lifetime cap of ₹25 lakh for non-government employees. Government employees get the full amount tax-free, with no cap.

What to include in a company leave policy

A leave policy is what keeps time off fair and predictable instead of a case-by-case negotiation. At minimum, it should spell out:

• Every leave type the company offers, and which are statutory versus discretionary

• Eligibility criteria for each, including any probation-period restrictions

• The entitlement, in days or hours, for each leave type

• How to request leave, including notice period and any required documentation

• Who approves each type, and what happens if a request is denied or needs rescheduling

• Carry-forward limits and expiry rules for unused leave

• Whether public holidays count against annual leave or sit separately

• How leave balances are tracked and made visible to employees, ideally through a self-service dashboard rather than an email trail

Getting this right does double duty: it keeps the company compliant with the statutory floor described above, and it’s one of the more visible signals to employees of whether the company backs up its stated culture.

Frequently asked questions

Can casual leave be carried forward to the next year?
Typically not. Casual leave is meant to be used within the year it’s granted, and most policies forfeit whatever’s left over rather than rolling it forward.

How does sick leave accrual work in India?
It usually accrues pro-rata with length of service, though the exact rate and any carry-forward allowance depend on the company’s own policy layered on top of the statutory minimum.

What is the difference between CL, PL, SL, and EL?
CL (casual leave) covers short unplanned absences and doesn’t carry forward. SL (sick leave) covers illness. PL and EL both refer to the same thing, privilege or earned leave, paid time off that accrues over the year and usually can be carried forward or encashed.

What happens if an employee exhausts all leave entitlements?
Depending on company policy, further absence is either granted as unpaid leave (LWP/LOP) or handled case by case, sometimes by borrowing against next year’s entitlement with manager approval.

Is maternity leave paid by the employer or the government?
The employer pays it directly, at the employee’s full average wages for the leave period; it isn’t a government benefit disbursed separately, the way some other countries structure parental leave.