Earned leave and privilege leave rules in India
Earned leave, also called privilege leave, is the paid leave an employee builds up by working. In most states it accrues at 1 day per 20 days worked, or comes as a fixed 12 to 20 days a year. It carries forward up to a cap, and the balance has to be paid in cash when the employee leaves. Get the accrual rate wrong and the full and final settlement is wrong too.
Last updated 12 September 2026.
Is earned leave the same as privilege leave?
Yes. The name depends on the act. The Delhi Shops and Establishments Act of 1954 says privilege leave. Maharashtra's 2017 act says earned leave. Tamil Nadu's 1947 act calls it holidays with wages. If your offer letters say PL and your HR tool says EL, it is one leave type with two labels.
What sets it apart from CL and SL is the accrual logic. Casual and sick leave are given per year and usually lapse. Earned leave accrues against days worked, carries forward up to a cap, and converts to wages at exit. That makes it a liability on your books, and it grows every month.
What does the OSH Code say about annual leave?
The Occupational Safety, Health and Working Conditions Code, 2020 came into force with the other labour codes on 21 November 2025. Section 32 sets the annual leave rule for covered establishments: 1 day of leave for every 20 days worked, eligibility after 180 days worked in the calendar year, and a carry forward cap of 30 days.
Two details in section 32 matter. Leave that a worker applied for and was refused carries forward without any limit, on top of the 30 day cap. And on discharge, dismissal, resignation or retirement the worker gets wages in lieu of the leave earned, even if the 180 day threshold was never crossed that year.
The government's transition note says the existing acts and their rules continue to remain in force while the codes settle in. So the practical answer for a small employer today: follow your state act's numbers, and expect the rules to move toward section 32 over time.
How much earned leave does each state give?
One row per state and union territory, from the leave section of each Shops and Establishments Act. Rows marked with an asterisk carry data not confirmed from official sources. Confirm those with the state labour department before you rely on them.
| State or UT | Act | Earned or privilege leave | Carry forward cap |
|---|---|---|---|
| Andaman and Nicobar Islands | S&E Regulation, 2004 | 15 days after 240 days worked | 45 days |
| Andhra Pradesh * | AP Shops and Establishments Act, 1988 | 15 days after 240 days worked | 60 days |
| Arunachal Pradesh | No state S&E act traced | No statutory entitlement traced | None |
| Assam | Assam S&E Act, 2022, in force since 21 March 2025 | 1 day per 20 worked, after 240 days | 45 days |
| Bihar | Bihar S&E Act, 1953 | 1 day per 20 worked, after 240 days | 45 days |
| Chandigarh | Punjab S&CE Act, 1958 | 1 day per 20 worked | 30 days |
| Chhattisgarh | CG S&E Act, 1958 | One month of privilege leave per 12 months | 3 months |
| Dadra and Nagar Haveli and Daman and Diu | Gujarat S&E Act, 2019, as adapted in 2022 | 1 day per 20 worked, after 240 days | 63 days |
| Delhi | Delhi S&E Act, 1954 | 15 days of privilege leave after 12 months | 45 days |
| Goa | Goa, Daman and Diu S&E Act, 1973 | 15 days after 240 days worked | 45 days |
| Gujarat | Gujarat S&E Act, 2019 | 1 day per 20 worked, after 240 days | 63 days |
| Haryana * | Punjab S&CE Act, 1958, as adapted in 1968 | 1 day per 20 worked | 30 days |
| Himachal Pradesh | HP S&CE Act, 1969 | 1 day per 20 worked | 30 days |
| Jammu and Kashmir * | J&K S&E Act, 2025, in force since 6 August 2026 | 1 day per 20 worked, after 240 days | 30 days |
| Jharkhand | Bihar S&E Act, 1953, as applied to Jharkhand | 1 day per 20 worked, after 240 days | 45 days |
| Karnataka | Karnataka S&CE Act, 1961 | 1 day per 20 worked | 30 days |
| Kerala | Kerala S&CE Act, 1960 | 12 days after 12 months | 24 days |
| Ladakh * | J&K S&E Act, 1966, continued after 2019 | One month of privilege leave per 12 months | 3 months |
| Lakshadweep | No S&E law | No statutory entitlement | None |
| Madhya Pradesh * | MP S&E Act, 1958 | One month of privilege leave per 12 months | 3 months |
| Maharashtra | Maharashtra S&E Act, 2017 | 1 day per 20 worked, after 240 days | 45 days |
| Manipur | Manipur S&E Act, 1972 | One month of privilege leave after 12 months | No accumulation |
| Meghalaya | Meghalaya S&E Act, 2004 | 16 days of privilege leave after 12 months | 30 days |
| Mizoram * | Mizoram S&E Act, 2010 | Data not confirmed from official sources | None |
| Nagaland | Nagaland S&E Act, 1982 | 16 days of privilege leave after 12 months | 30 days |
| Odisha | Odisha S&CE Act, 1956 | 1 day per 20 worked, after 240 days | 30 days |
| Puducherry | Puducherry S&E Act, 1964 | 12 days after 12 months | 24 days |
| Punjab | Punjab S&CE Act, 1958 | 1 day per 20 worked | 30 days |
| Rajasthan | Rajasthan S&CE Act, 1958 | 1 day per 12 worked, after 240 days | 30 days |
| Sikkim | Sikkim S&CE Act, 1983 | 20 days after 12 months | 60 days |
| Tamil Nadu | TN S&E Act, 1947 | 12 days after 12 months | 45 days |
| Telangana | Telangana S&E Act, 1988 | 15 days after 240 days worked | 60 days |
| Tripura | Tripura S&E Act, 1970 | 15 days of privilege leave, full pay | 56 days |
| Uttar Pradesh * | UP Dookan Aur Vanijya Adhishthan Adhiniyam, 1962 | 15 days per 12 months, watchmen 60 | 45 days |
| Uttarakhand | Uttarakhand S&E Act, 2017 | 1 day per 20 worked, after 240 days | 45 days |
| West Bengal * | WB S&E Act, 1963 | 14 days of privilege leave | 28 days |
* Data not confirmed from official sources. All other rows: the state act texts on India Code and state labour department portals, as listed in the research note behind this page. Checked 31 August 2026.
How much earned leave can be carried forward?
Most acts let unused earned leave roll into the next year until the balance reaches a cap: 30 days in Karnataka and Punjab, 45 in Maharashtra and Bihar, 60 in Telangana and Sikkim, 63 in Gujarat. Above the cap, further days lapse. There is one common exception. Several acts, Gujarat and Uttarakhand among them, let the employee encash or accumulate the excess when the employer refused leave that was applied for in time. The refusal is what triggers that right.
Manipur is the exception in the other direction. Its 1972 act bars accumulation of any leave.
What happens to earned leave when an employee resigns?
Nearly every state act requires the employer to pay for earned leave that was due but not taken when service ends, whether by resignation, termination or retirement. Karnataka's act sets a deadline: payment within two working days of a termination. The unpaid balance goes into the full and final settlement, at the leave wage rate the act defines, usually the daily average of recent earnings.
So the leave register is an accounting record. If balances are tracked loosely through the year, the F&F turns into an argument. Track accruals monthly and show the balance on the payslip, and the exit maths is simple. Also decide in the policy whether earned leave can be set off against the notice period, because employees will ask.
The short leave types work differently; see the casual leave guide and the sick leave guide. All ten types are listed on the types of leave index.
Common questions
How is earned leave calculated in India?
In most states, one day of earned leave accrues for every 20 days worked, which comes to roughly 15 days for a full year. Some acts grant a fixed number instead: 12 days in Kerala and Tamil Nadu, 15 in Delhi and Telangana, 20 in Sikkim. A qualifying period applies in many states, commonly 240 days worked in the previous year.
Is 240 days still the eligibility rule?
Under most state acts, yes, a worker qualifies after working 240 days in the previous calendar year. The OSH Code, in force since 21 November 2025, lowers the threshold to 180 days for establishments it covers, and the two regimes will coexist while states finish notifying their rules.
Can earned leave lapse?
Only above the carry forward cap. Up to the cap, typically 30 to 63 days depending on the state, the balance rolls forward. Several acts also protect leave the employer refused, letting it accumulate without limit or be encashed.
Is earned leave encashment taxable?
Leave encashment during service is taxable as salary. At retirement or resignation, an exemption exists for private employees up to a limit set under the Income Tax Act. The limit has changed over the years, so confirm the current figure with your CA before the F&F is drafted.
Do EL rules apply during probation?
The state acts mostly tie earned leave to days worked, not to confirmation. Where the act has a 240 day qualifying rule, a new joiner may simply not qualify in year one. Maharashtra's act grants pro rata leave once three months are worked. Your policy can be more generous than the act, never less.
Track leave balances and pay them out correctly
Offrd turns your leave policy into a written document, and its payslip and full and final templates carry the encashment maths. 50 free credits on signup, no card.