Leave Policy – Guide for creation and implementation

Employees are the most important asset of any organization To make sure that the employees are productive and do not show high levels of absenteeism, the HR personnel has to undertake several policies. These policies are to ensure that the interests of the employees or the human capital are protected. Leave policy is 1 such important policy that has a high bearing on employee engagement and attracting talent

The leave policy of an organization is laying down a proper guideline as to how many leaves the employees can take in a year and on what grounds. The absence of a proper leave policy only means incompetent management. This can potentially lead to the sudden absence of employees, lower productivity, and less productive hours. This can impact the overall productivity of the organization and lead to missing targets and deadlines.


Leave policy in an organization is the total number of leaves that an employee can take in a year. This also includes the types of leaves, their nature, whether they are paid or unpaid, what is the maximum duration for those leaves, etc. A leave policy includes the paid leaves, the unpaid leaves as well as the national holidays that an employee is granted. They should also include the process to be followed for taking a leave.

How to create and implement a Leave Policy

The leave policy is an annual policy statement that is provided to every employee of the organization mentioning all the above-mentioned details.

Types of leaves

  • Casual leave OR Sick Leave

    Maximum 12 casual leaves can be availed by an employee in a given year. Casual leaves are paid in nature. They cannot be clubbed with any other leave and cannot be carried forwarded to the next year. Casual leave for 1 day should be applied for a day in advance. For more than 2 days, it should be applied a week prior.

  • Earned leave OR Privelege Leave

    The application for earned leaves should be put 15 days prior. Earned leaves can be carried forwarded to the next year. However, for employees who have been in service for more than 5 years, only 45 earned leaves can be carried forwarded. To maintain the LTA, compulsory 6 earned leaves have to be taken by the employees.

  • Maternity leave

    A woman employee can take maternity leave for a paid period of 26 months. Leave during the first 7 months of pregnancy will be considered as normal leave. The employee can take maternity leave 8 weeks before the due date of delivery.

  • Paternity leave

    Every regular male employee is applicable for availing a paternity leave. The paternity leave must be taken within 15 days of childbirth. The leave has to be availed on a stretch. The leave must be applied for 15 days before the due date of delivery.

  • Unpaid leave

    Once an employee has used up his current allotted leaves, he/she can apply for leave without pay. If an unpaid leave is availed without proper permission, it will be subject to disciplinary action by the management. Three months of unpaid leave can be availed at the most.

  • Compensatory leave

    When an employee has finished a specific task of importance or has worked on a national holiday or any declared holiday, he/she will be eligible for compensatory leave. However, this leave must be availed within a month otherwise it would not be applicable anymore.


Creating a leave policy is not only an extremely vital task in terms of the organization as well as the employees it is also complicated. An organization cannot frame an ill-designed leave policy and impose that on the employees. The policy needs to comply with all legal requirements, employee acts, and also follow best practices for employee welfare. The leave policy should be created keeping in mind diverse aspects concerning both the organization as well as its employees.



While creating a leave policy, the purpose and the conditions under which leave can be taken by an employee must be mentioned. It is to be noted that an employee cannot take leave daily and whenever he/she wishes. Hence the purposes like casual leave, maternity leave, military leave, et cetera should be mentioned in the leave policy.


The compliance of taking the leaves should also be mentioned. This means the duration for which a particular leave can be taken, who is the reporting authority, the process of applying for the leave, whether it is paid or unpaid should be stated in the leave policy.

Legal guidelines

The legal guidelines and acts should be double-checked and it should be made sure that the policy is strictly following all the legal guidelines concerning the case. It is highly suggested to employ an attorney for framing an organization’s leave policy.


The employee insurance factor should also be considered to ensure that the company does not run into any trouble during the employee leaves.

Final framing

After all of these factors are considered and double-checked the leave policy should be finally made in writing and produced as an official statement for the employees to go over.

As already mentioned, leave policy is an extremely vital part of any organization and hence before it is officially framed the above-mentioned factors should be


The fact that a company will spend so many resources on creating and implementing a leave policy poses a very important question – WHY IS IT SO IMPORTANT?

From a layman’s perspective, a leave policy is just a rule book of when and how can a person skip work. However, from an organizational and HR perspective, it has a great significance. The policy protects an organization legally. Besides, it also makes sure that an organization is never under-staffed and is ready for contingencies.

A leave policy and its compliance makes sure that an organization at all times has a transparent of its needs and its present resources.

  1. Without a structured policy, an employee will most likely take an uninformed leave. This will impact the entire organization as there is no clear guideline about how to substitute the absent employee’s work.
  2. Leave policy improves the communication between the employer and the employee regarding the functioning of the organization and individual responsibilities.
  3. Needless to say, it fulfills the legal obligation of any organization.
  4. A proper policy prepares the organization for any kind of contingency. Also, it avoids ambiguity regarding the operations inside an organization in case any employee is absent.
  5. It provides higher flexibility in terms of the employee in case of time-off.


Some common guidelines apply to every leave policy irrespective of the type, size, and nature of the organization. It is as described below:

  1. The annual calendar of leave starts from January and ends in December.
  2. An employee would not be applicable for an earned leave unless he/she has finished the probationary period.
  3. An employee must utilize 18 leaves in a year to maintain a work-life balance.
  4. Not more than 9 earned leaves can be carried forwarded to the next year.
  5. A leave without proper approval will be counted as unpaid leave.


Leave policies are not an organizational luxury, it is a necessity. For every budding as well as established HR personnel knowing the nitty-gritty of a leave-policy is a must.

It has multi-dimensional benefits and its significance is huge.

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