Understanding Labour Laws and Regulations for Leave Management in India

Understanding Labour Laws and Regulations for Leave Management in India


LMS, or Leave Management System, is governed by labor laws and regulations. These laws ensure fair treatment and protection of the employees working for a business. These laws specify the procedures and the entitlements for different types of leaves. The LMS leave management outlines the employee rights in terms of leave accrual, leave usage, and leave balance. It is an important statutory compliance in HR and mandatory for the prevention of any disputes. Besides protecting the well-being and rights of employees, labor laws set for the leave management system also promote a peaceful work environment. Let us learn more about labor laws and regulations for leave management in India.

Understanding Leave Types and Entitlements in India

i. Sick Leave Policies: Rights and Responsibilities

Sick Leaves in India can be anywhere between 5 and 12 days in a year – a maximum of 12 days is permitted annually. The vacation policies in India are overseen by the state governments and include casual and sick leaves. The policies may be different for every state – some states grant their employees one day of leave for 20 days of work, while other states offer up to 15 days of vacation in a year.

Sick Leave

All employees exceeding their sick leave for more than 2 or 3 days should provide their company with a medical certificate proving that they are unfit for work. Sick leaves cannot be carried over to next year. Employees cannot ask to be paid for these balance sick leaves on termination. However, they can take them along with the PL or Privilege Leaves. Employers usually pay between 70% to 100% of the average salary of their employees for the leaves they have taken.

ii. Annual Leave and Vacation Policies Demystified

Annual leave and vacation policies in India are governed by key labor laws, including the Factories Act of 1948 and the Shops and Establishments Act. Here is an overview:

  • Casual Leave: It falls under annual leave entitlements. It is intended for short, unplanned absences and may range from 5 to 12 days in a year.
  • Vacations: It is mandated by labour laws or company policies. Vacation entitlements can vary, with employees typically receiving between 15 to 30 days of vacation leave per year.
  • To request annual leave or vacation time, employees should follow these steps: –
    • Refer to company policies or labor laws of their state to understand entitlements and procedures.
    • Submit a leave request through the designated HR system or to the relevant manager.
    • Provide necessary details, such as the duration of leave and reason for absence.
    • Await approval from the appropriate authority before finalizing travel plans or taking time off.
iii. Special Leave Provisions: Bereavement, Jury Duty, and More

Companies may grant a few other types of leaves. Let us understand these additional provisions, including their significance and the circumstances under which they are usually granted:

  • Bereavement Leave – This type of leave allows employees to take time off to mourn and attend funeral arrangements when they have lost a close family member or relative. It is normally granted for a specified number of days, such as 3 to 5 days, depending on company policies.

  • Jury Duty Leave – Unlike some countries, India does not mandate specific provisions for jury duty leave under national labor laws. However, some organizations may have internal policies that let employees take time off for jury duty without facing adverse consequences. Employers may be required to provide paid or unpaid leave, depending on local regulations.

  • Voting Leave in India – Indian law mandates that employers provide employees with a reasonable amount of time off to cast their votes on election days. This time off is typically granted as a few hours of paid leave to ensure employees can participate in the democratic process without any problems.

  • Marriage Leave, Adoption Leave, and Surrogacy Leave – Indian labor laws do not specifically mandate marriage leave, adoption leave or surrogacy leave. However, many companies offer these types of leave as part of their employee benefits package. Marriage leave may be granted for a few days to allow employees to celebrate their wedding, while adoption leave and surrogacy leave are typically provided to employees who are adopting a child or using a surrogate to expand their family. But if a woman is going through the process of surrogacy (carrying a child for someone), then she will be allowed leave for 26 weeks or 180 days. The duration of these leaves may vary depending on company policies and the specific circumstances involved.

Compliance Essentials: Tips for LMS Leave Management

Some important tips that will ensure leave management while adhering to both company policies and legal laws:

  • Learn and understand the relevant labor laws and regulations governing leave entitlements in your state.

  • Establish clear and comprehensive leave policies that outline the types of leave available, eligibility criteria, and procedures for requesting and approving leave.

  • Regularly communicate the leave policies to employees and offer training to managers and HR personnel on their implementation.

  • Maintain accurate records of employee leave balances, usage, and approvals to ensure transparency and compliance.

  • Consider implementing a centralized leave management system or software to streamline leave tracking and administration processes.

  • Stay updated on changes to labor laws and regulations related to leave entitlements and adjust policies accordingly to maintain compliance.

Managing Leave Requests: Best Practices for Employers

Here is what employers should put into practice for efficient leave management in their business:

  • Ensure that leave requests are processed promptly and in accordance with the company policies and legal requirements.
  • Implement a standardized leave request procedure to maintain consistency and transparency across the organization.

  • Train HR personnel and managers on compliance requirements and best practices for handling leave requests.

  • Maintain detailed records of leave requests, approvals and any associated documentation for audit purposes.

  • Regularly review and update leave policies and procedures in order to reflect changes in laws, regulations, and business needs.

  • Communicate leave policies clearly to employees and provide them with access to relevant resources for understanding their entitlements and obligations.

Addressing Employee Absenteeism: Strategies and Solutions

In order to address employee absenteeism, employers can implement a few solutions, as below:

  • Implement a clear attendance policy outlining expectations, consequences for absenteeism, and procedures for unexplained absences.

  • Provide incentives for good attendance, such as rewards or recognition programs for motivating employees to maintain regular attendance.

  • Offer flexible work opportunities, such as flexible scheduling or telecommuting to accommodate employees’ personal needs and reduce absenteeism.

  • Conduct regular meetings with employees to discuss attendance issues, identify underlying causes of absenteeism, and provide support or resources as needed.

  • Utilize attendance tracking software or systems to monitor employee attendance patterns and identify trends or recurring issues.

  • Provide training and resources to supervisors and managers on how to effectively manage attendance issues, including conducting return-to-work interviews and addressing performance concerns.


Leave management stands as a complex aspect of HR and payroll services, which requires careful management of statutory compliance, company policies and employee needs. Outsourcing this responsibility to a trusted third-party provider, like us – Paysquare can significantly enhance the efficiency and effectiveness of leave management processes. By employing our expertise and resources, businesses can ensure compliance, streamline operations, and foster a more productive workforce. Moreover, Paysquare’s comprehensive suite of services extends beyond leave management.

Ref – https://vacationtracker.io/leave-laws/asia/india/

Ref – https://www.thehindubusinessline.com/news/women-staff-having-child-by-surrogacy-to-get-maternity-leave/article22688922.ece#:~:text=Women%20employees%20of%20the%20central,weeks%20(about%20180%20days).