Rivermate | India flag


Vacation and Leave Policies

Understand the regulations on vacation and other types of leave in India

Holiday leave

In India, the vacation leave policies are primarily governed by two sets of legislation, The Factories Act, 1948, and The Shops and Establishments Acts (S&E Acts). The Factories Act applies to factories employing 10 or more workers, while the S&E Acts, enacted by individual states, cover establishments outside factories, such as shops, IT companies, and service industries.

Minimum Vacation Leave

The Factories Act stipulates that employees who have worked for a minimum of 180 days in a calendar year are entitled to leave. This was previously 240 days but was amended under the Occupational, Safety, Health and Working Conditions Code, 2020. The minimum entitlement is 12 working days of annual leave per year.

Under the Shops and Establishments Acts, the minimum entitlement varies by state, typically ranging from 1 day of leave for every 20 days worked to a minimum of 12-18 days of annual leave. However, these are the minimum legal requirements, and many companies offer more generous vacation leave policies as part of their employee benefits package.

Additional Factors to Consider

Under the Factories Act, young workers under 15 years old are granted additional leave entitlements, providing them with one day of leave for every 15-day work period. Some companies may allow employees to encash a portion of their unused vacation leave under specific company policies. Leave carry-over policies may vary depending on the state, company, or specific industry regulations.

Public holidays

India, known for its rich culture and diverse traditions, celebrates a variety of public holidays throughout the year. These holidays include national events, religious festivals, and regional commemorations.

National Holidays

  • Republic Day (January 26th): This day celebrates the adoption of the Constitution of India in 1950, marking India's transition to a republic.
  • Independence Day (August 15th): This day commemorates India's independence from British rule in 1947.
  • Mahatma Gandhi Jayanti (October 2nd): This day marks the birth anniversary of Mahatma Gandhi, the "Father of the Nation."

Religious Holidays

  • Diwali (Varies): Known as the "Festival of Lights," this five-day Hindu celebration symbolizes the triumph of good over evil and light over darkness. The dates vary based on the lunar calendar.
  • Holi (Varies): Often referred to as the "Festival of Colors," this joyous Hindu festival marks the arrival of spring. The dates vary based on the lunar calendar.
  • Eid al-Fitr (Varies): This holiday celebrates the end of Ramadan, the Islamic holy month of fasting. The dates vary based on the lunar calendar.
  • Good Friday: This Christian holy day commemorates the crucifixion of Jesus Christ.
  • Christmas Day (December 25th): This day celebrates the birth of Jesus Christ.

Regional Holidays

Many Indian states have their own public holidays specific to their regional traditions and festivals. Here are a few examples:

  • Ugadi (Varies): Celebrated as the Kannada New Year in Karnataka and other South Indian states. The dates vary based on the lunar calendar.
  • Onam (Varies): A ten-day harvest festival celebrated in Kerala. The dates vary based on the solar calendar.
  • Durga Puja (Varies): A ten-day Hindu festival celebrating the victory of Goddess Durga over the demon Mahishasura. It is primarily observed in West Bengal, Odisha, and Tripura. The dates vary based on the lunar calendar.

Important Considerations

  • Public holiday observances may vary slightly year to year due to lunar calendar variations.
  • Some private companies may not observe all public holidays.
  • Certain regional holidays may be granted as paid leave within specific states or sectors.

Types of leave

In India, employees are entitled to various leave categories under a combination of central legislation and state-specific regulations. These include:

The Factories Act, 1948

This act is applicable to establishments employing 10 or more workers.

The Shops and Establishments Acts (S&E Acts)

Individual states enact their own versions, covering establishments outside factories.

Mandatory Leave Categories (Central Legislation)

Privilege Leave (PL) / Earned Leave (EL) / Annual Leave (AL)

  • Entitlement: Minimum of 12 working days per year under the Factories Act. Entitlement may vary under S&E Acts (check your state's specific Act).
  • Purpose: Rest, relaxation, and personal time.
  • Eligibility: Employees who have worked for a minimum period (typically 180 days under the Factories Act) in a calendar year.

Sick Leave

  • Entitlement: No specific central legislation mandate, but some states under their S&E Acts may provide minimum entitlement.
  • Source: Leave is usually granted based on company policy or individual employment contracts.

Other Common Leave Categories (Company Policy or State S&E Acts)

Casual Leave (CL)

Short leaves for unplanned personal reasons. Entitlement and duration vary greatly based on company policy.

Maternity Leave

  • Central Legislation: Not mandated centrally, but some states have provisions under their S&E Acts.
  • Company Policy: Many companies offer paid maternity leave exceeding statutory minimums mandated by some states.

Paternity Leave

  • Central Legislation: No central mandate.
  • Company Policy: Increasingly offered by companies, although typically shorter than maternity leave.

Bereavement Leave

Short leave granted in case of a family member's death. Entitlement and duration vary by company policy or state S&E Acts.

Compensatory Leave (Comp Off)

Leave granted in lieu of working overtime or on a public holiday.

Leave Without Pay (LWOP) / Loss of Pay Leave (LOPL)

Unpaid leave for various reasons, subject to employer's approval.

Important Considerations

This is a general overview. Specific entitlements and regulations may vary based on your state, industry, and company policy. Always refer to your employment contract, company handbook, or the relevant state's S&E Act for the most accurate details regarding your leave entitlements.

Rivermate | A 3d rendering of earth

Hire your employees globally with confidence

We're here to help you on your global hiring journey.