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January 24, 2023

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Casual Leaves and Earned Leaves in India and How Do They Work?

Casual Leaves and Earned Leaves in India

Every country/province has a leave policy for the welfare of employees. Similarly, India has a well-defined policy for employees to take leaves, irrespective of the sector. Private and government employers must offer their employees a certain number of leaves. Employees can apply for leaves as part of the earned and casual leaves program. Some other leaves are also granted to employees across the country. 

The type of leaves for employees in India might change from one state to another. However, both casual and earned leaves are available across every state in India. Are you planning to start your career as an employee in any Indian state? Here’s what you need to know about casual leaves and earned leaves. 

What is Casual Leave (CL)?

An employee can take a CL (Casual Leave) due to an unavoidable circumstance. Often, employees cannot come to the workplace due to emergencies. An employee can take leave from work for a few days with the CL rules. However, the employee can only use a casual leave for personal reasons. One cannot use casual leaves for an outstation trip or getaway. Employers are usually careful when it comes to offering casual leaves to employees. 

In general, employers allow up to three CLs in a month. Also, the employee must apply for a casual leave beforehand. The employer might reject an abrupt/sudden CL appeal of an employee. Usually, employers have an admission management platform to manage employee leaves. Employees can apply for casual leave on the platform ahead of time. No pay is cut for the casual leaves taken by employees. 

Casual Leave Rules 

Rules concerning CLs in India are as follows: 

1. You are allowed to take casual leaves between half-day and three days. If you want to take three CLs at once, you must ask for the same from the management. 

2. Some employers in India are bound by the Shops and Establishment Act. Employees working for such employers can get six casual leaves. 

3. One cannot carry forwards CLs to the upcoming calendar year. Once the calendar year is finished, the remaining casual leaves are expired. 

4. Remaining/unutilised casual leaves cannot be converted to privileged leaves or earned leaves. They will expire once the current year is finished. 

5. One cannot treat casual leaves as leaves for sickness or earned leaves. 

6. For employees that have just started working, CLs are offered proportionately. Let us say an employee has joined the company when only six months are left in the year. The employee will only get half of the casual leaves for the year. 

What is Earned Leave (EL)?

Since employees work over 240 days annually, they earn some leaves. EL (Earned Leaves) can be used by employees for travel, vacation, or any other reason. Employers usually extend an admission management system for employees to avail of earned leaves. 

Earned Leave Rules 

Rules associated with earned leaves are as follows:

1. Earned leaves are offered to an employee at the beginning of the year. Usually, earned leaves are offered according to the number of days an employee has worked for the company. Most employers offer 1.25 days of earned leave after the employee completes 30 days/1 month of service. 

2. When an employee starts working in between the current year, earned leaves are allotted on a proportionate basis. In such a case, earned leaves are allotted from the date of joining to the last day of the year. 

3. When a company’s employee resigns in between the year, the earned leaves are calculated on a proportionate basis. If the employee has used extra earned leaves, they are adjusted during the final settlement process. 

4. When an employee fails to use all the ELs, they are forwarded to the next calendar year. As per the carry-forward policy in India, a maximum of 30 earned leaves can be forwarded by an employee. However, it might be up to 2 months/60 days according to the Shops and Establishment Act for some states. 

5. When someone resigns from work, the remaining earned leaves are automatically encashed. 

6. Employees do not have to pay taxes after encashing their earned leaves. 

Differences Between Casual Leave, Privilege Leave, and Earned Leave

Employees often do not know the dissimilarity between casual leave, privilege leave, and earned leave. As discussed above, casual leaves cannot be used for vacation or travel. Casual leaves are only applicable for personal reasons. On the other hand, earned leaves are utilized for vacation or travel by employees. Earned leaves are rewarded to employees after they complete a certain number of working days. 

There is a subtle difference between earned leave and PL. However, the nature of PL and casual leaves is similar in India. Major differences between earned leaves and PL are as follows: 

1. The leave available for employees is known as earned leave according to the Indian Factories Act. On the hand, the leave allotted to employees is referred to as PL (Privilege Leave) according to India’s Shops and Establishment Act. 

2. According to India’s Factories Act, an EL is allotted to the employee for every 20 days he/she works for the company (around 18 ELs in a year). The Shops and Establishment Act states that five PLs will be offered to employees for every 120 days/4 months of work (around 15 PLs in a year). 

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1. How many leaves can a company grant?

Employee leaves offered by an employer will depend on the state. Almost every employer in India will offer leaves for a minimum of 7-8 national holidays. The company will also offer some festive holidays to its employees. Employees are also eligible to take earned and casual leaves throughout the year. 

2. How are earned leaves calculated?

Earned leaves are calculated every month for employees. However, the leaves are applicable for the entire calendar year. 

3. Can you take leave during the notice period?

An employee can take a leave during the notice period only for emergency reasons. For example, an employee can take a leave during the notice period due to health concerns.

4. What is encashment of leave?

When employees leave a company, they can encash their remaining leaves. Employees do not have to pay taxes on the amount received after enchasing their leaves in India.