Leave Policy Template: Free Ready-To-Use Policy Format
Get Free Leave Policy PDF Template – Easy to Customize
In India, managing compliance with leave policies can be complicated. Different state laws, changing labor codes, and varying leave entitlements often make it challenging for organizations to stay compliant, sometimes leading to fines or employee disputes.
Without a clear HR leave policy, HR managers repeatedly face issues such as confusing approvals, incorrect leave balances, unclear sandwich rules, payroll mismatches, and unhappy employees. Over time, this lack of clarity impacts trust, job satisfaction, and employee retention.
This is where SignalHRM’s leave policy template comes in handy. It’s ready to use, legally compliant, and easy to customize, covering everything from eligibility and accrual to carry forward, encashment, and approval workflows. When combined with SignalHRM’s automation tools, it helps standardize processes, ensure compliance, and bring transparency to leave management.
In this guide, we explain the legal basics, share practical tips, and outline best practices. Our aim is to help organizations move from confusion to clarity and from manual tracking to simple, automated leave management.
Seamless Leave Management
with SignalHRM
Leave Policy Format
A leave policy is a formal document that outlines the guidelines employees need to follow when taking time off. This leave policy format helps organizations understand, implement, and apply the policy effectively.
Company: [Name of the Company]
Effective Date: [DD MMM YYYY]
Policy Owner: HR
Purpose
To outline rules and procedures for employee leaves.
Eligibility & Scope
Applies to all confirmed employees.
Leave Entitlement
- Privilege Leave
- Casual Leave
- Sick Leave
- Maternity Leave
- Paternity Leave
- Sabbatical Leave
At “Name of the Company,” we value our employees and provide a reasonable and regular amount of time off from work. This leave of absence policy outlines the rules and procedures for requesting leave. We recognize the importance of balancing professional and personal life; however, leave approval or rejection depends on the situation and business requirements.
Purpose
This policy outlines the guidelines for requesting a leave of absence and clearly defines the types and number of leaves employees are entitled to each calendar year.
Eligibility
The leave policy is applicable to all regular and confirmed employees, while trainees and probationary employees are entitled only to sick leave. The leave year is from 1 January to 31 December.
Scope
This leave policy is applicable to all employees within the organization.
Leave Entitlement
All the employees are entitled to Leave, and the types of leave are as follows.
- Privilege Leave
- Casual Leave
- Sick Leave
- Maternity Leave
- Paternity Leave
- Sabbatical Leave
- Festivals and Holidays
- Unpaid Leave
Guidelines
- Leave will be calculated on a calendar-year basis.
- Casual and sick leaves will be credited to an employee’s leave account at the start of the calendar year, that is, 1 January, or on the employee’s date of joining for new hires.
- Privilege leave will be credited to the employee’s leave account at the start of every month, as applicable.
- Employees who join after this date will receive leave entitlements on a prorated basis, calculated according to the remaining time in the year.
- Privilege leave is granted only after an employee completes probation or once their employment is confirmed.
- Casual or sick leave cannot be taken for more than [number of days] days at a time.
- Casual or sick leave cannot be taken for less than [number of days] days.
- If you request leave for more than [number of days], you must submit a doctor’s certificate.
- The company reserves the right to refer an employee to a doctor to assess the seriousness of the illness.
- Leave should be applied for at least [number of days] days in advance.
Festivals
In addition to the leaves mentioned above, there will be a certain number of paid holidays. The list of these holidays will be shared at the beginning of the calendar year. These holidays cannot be carried forward or encashed.
Leave without Pay
Employees may apply for leave without pay (LWP) when their leave balance is zero or negative. This process helps maintain the proper reporting hierarchy. The reporting manager will share their recommendation with the Head of HR for final approval. Holidays that fall on weekly offs will not be paid. Any LWP exceeding [number of days] requires approval from the Director or CEO.
Sabbatical Leave
Employees who wish to improve their job-related qualifications may take a sabbatical leave of up to one year, provided they have completed at least [number of years] of continuous service with the organization. The HOD will forward their recommendation to the Head of HR for the CEO’s final approval.
Maternity Leave
Maternity leave benefits will be provided to women employees who are not covered under the ESI Act, in accordance with the Maternity Benefit Act, 1961. In cases of pregnancy-related illness, the leave may be extended up to a maximum of [time frame], which will be adjusted against the employee’s leave balance.
Paternity Leave
Paternity leave benefits will be granted to all male employees for a maximum of [time frame] in the event of childbirth or adoption. This benefit applies for up to [number of children] children. Paternity leave must be taken within [time frame] of the child’s birth or adoption.
Leave during Probation or Notice Period
Employees serving their probation or notice period are generally not allowed to take leave.
Leave Accumulation/Encashment Policy
Employees are allowed to accumulate up to [number of days] of leave. Any accrued leave will be automatically encashed at the beginning of the next calendar year. If the accumulated leave exceeds [number of days], the excess can be encashed, considering only the previous year’s leave balance.
Application Process
All employees must submit their leave request to their reporting manager within 30 days, except in case of emergencies. The request should mention the type of leave, start and end dates, and the reason.
Approval Process
The reporting manager will review the leave request and decide whether to approve or reject it. If approved, the employee will be informed.
Disciplinary Measures
The reporting manager and the Head of HR will take appropriate action if the policy is not followed. This may include verbal or written warnings for minor violations and suspension or demotion in cases of serious violations.
Exception
Management may revise this policy to meet statutory requirements or business needs. However, any exceptions will be allowed only with approval from the Head of HR.
Streamline your leave
approval process with Leave
Management System
What are the Various Leave Rules for Employees?
Leave rules explain how employees can take time off in corporate organizations. They outline eligibility for leave accrual, the approval process, and carryover rules.
- Earned Leave: Planned leave accrued based on days worked.
- Casual Leave: Short, unexpected absences including half-days.
- Sick Leave: Illness-related leave with medical requirements.
- Maternity Leave: Governed by statutory laws.
- Discretionary Leave: Paternity, bereavement, marriage, sabbatical.
- Compensatory Off: Time-off against extra working days.
Lastly, the system should set up workflows and handle year-end processing. To learn more about different leave types, you can refer to this comprehensive guide.
Role of HR & Line Managers in Leave Administration
- Policy design and classification: HR must define eligibility and accrual rules.
- Administration and controls: Managers approve leave based on rosters.
- State-by-state compliance: HR maintains location-specific policies.
- Record-keeping and audits: Accurate leave ledgers and reports.
- Training and communication: Managers trained for edge cases.
Seamless Leave
Management with SignalHRM
Take the Next Step
A strong leave policy forms the foundation of a productive workplace that benefits both employees and the organization. It helps reduce stress and burnout while supporting employees’ mental and physical well-being. For organizations, it results in higher productivity and a stronger employer brand.
To learn more about the HR leave policy template, you can download it in PDF or Word format. For better management and tracking of employee leave, you can use SignalHRM’s leave management module, which automates and simplifies the entire leave process with accuracy.
What Features Make a Good Leave Policy for Private Companies?
A good leave policy clearly explains the different types of leave, eligibility criteria, how leave is earned, carried forward, or encashed, and the process for applying and approving leave. It should also comply with local laws, be easy to understand, and be supported by an HR system for accurate tracking and fairness.
What is the Leave Policy for the Weekend?
Labour laws ensure that employees receive at least one weekly rest day. If an employee works on a weekend, they must be given a compensatory rest day. Whether weekends are counted as part of leave depends on the company’s sandwich rule, which should be clearly defined in the leave policy.
How to Prepare a Holiday/Festival List for Employees or Organizations?
When creating a holiday or festival list, companies should first include mandatory national and gazetted holidays, followed by regional festivals relevant to their locations. The list should be finalized early in the year, approved by management, and easily accessible to employees so they can plan in advance.
How Many Paid Leaves are Private Companies Required to Give in India?
The number of paid leaves that private companies must provide in India varies by state. In many states, employees are entitled to around 12 days of casual or sick leave (either combined or separate) and 12–18 days of earned or privilege leave each year. For factories, the Factories Act applies, which grants one day of leave for every 20 days worked after completing 240 days of service.
Can Earned Leave be Carried Forward or Encashed?
Earned leave can usually be carried forward within statutory or policy limits. In many cases, it can also be encashed either at the end of the year or when an employee leaves the organization, depending on the applicable rules. Any leave encashment may have tax implications under Section 10(10AA) of the Income Tax Act.
Is Maternity Leave Mandatory in Private Companies?
Maternity leave is mandatory for eligible women employees under the Maternity Benefit Act, which applies to establishments with 10 or more employees. The law provides up to 26 weeks of paid leave and also covers cases such as adoption or commissioning motherhood. Companies that do not comply may face penalties.
