Leave Types in India: CL, SL, EL and Comp-Off Explained

Indian labour law provides four main leave categories to employees: casual leave (CL), sick leave (SL), earned leave (EL, also called privilege leave), and compensatory off (comp-off). The exact number of days for each depends on which state your business operates in, because state-level Shops and Establishments Acts govern leave rules for most private businesses, and by Section 79 of the Factories Act, 1948 for factory workers.

Here is a quick breakdown before the detailed sections:

Key Takeaways

• CL covers short, unplanned absences and expires at year-end in most states
• SL requires a medical certificate for absences longer than 2-3 consecutive days
• EL accrues based on days worked (1 day per 20 days under the Factories Act) and can be carried forward up to 30 days
• Comp-off is earned when an employee works on a holiday or week-off, and must be used within a fixed window
• State Shops and Establishments Acts set the minimum entitlement; your company policy can only add to it, not reduce it

What Is Casual Leave (CL)?

Casual leave in India covers short, unplanned absences and typically provides 6 to 12 days per year depending on the state. The Maharashtra Shops and Establishments Act provides 8 days, Delhi provides 12 days, and Karnataka does not specify a separate CL quota. Unused CL days lapse at year-end and hold no cash value.

A staff member who needs a day off for a personal errand, a family obligation, or a minor health issue that does not require extended rest typically applies for CL.

Rules that apply to CL in most states:

• Unused CL days lapse at year-end (31 December or 31 March, depending on the company’s leave year). They do not carry forward.
• Employers do not encash CL at resignation or termination. It holds no cash value.
• Employees generally cannot club CL with other leave types. If a textile showroom employee in Vastrapur takes 2 days of CL followed by 3 days of EL, many state rules treat the gap as a break and require separate approval.
• Most companies cap CL at 1-3 days per instance. A diagnostic chain in Thane, for example, would reject a CL request longer than 3 consecutive days and ask the employee to apply for SL or EL instead.

What Is Sick Leave (SL)?

Sick leave is time off for medical reasons. The worker is either unwell, recovering from a procedure, or under medical advice to rest. Most states provide between 7 and 15 days of sick leave per year under their Shops and Establishments Acts.

Maharashtra provides 15 days of SL. Delhi provides 12 days. Karnataka provides 12 days. These are statutory minimums for establishments covered under the respective state Acts.

Key rules for sick leave:

• Most companies require a medical certificate for SL beyond 2-3 consecutive days. For example, a 40-person accounting firm in Baner or a hospital in Madhapur would ask for a doctor’s note from the third day onward.
• Employers do not encash SL in most states. Unlike EL, unused sick days do not convert to salary at resignation.
• Carry-forward rules vary by state. Some allow partial carry-forward; others reset the balance to zero at year-end.
• SL is separate from maternity leave, which falls under the Maternity Benefit Act, 1961, and provides 26 weeks of paid leave for the first two children.

What Is Earned Leave (EL)?

Earned leave, also called privilege leave (PL) in some states, is the only leave type that accrues based on attendance, can be carried forward across years, and can be encashed for cash value on separation.

Under Section 79 of the Factories Act, 1948, an adult worker who has completed 240 days of work in a calendar year earns leave at the rate of one day for every 20 days worked. That translates to roughly 12-15 days of EL per year for a full-time worker. The carry-forward cap under the central Act is 30 days for adults.

State Shops and Establishments Acts set their own EL entitlements for non-factory workers. Maharashtra provides 21 days, Delhi provides 15 days, and Karnataka provides 18 days of earned leave per year.

State-wise EL entitlement (statutory minimum):

Rules that apply to earned leave:

• Employees must apply for EL in advance. Most companies require requests 7-15 days before the leave date. A retail chain operations head in Ahmedabad planning a Diwali break for floor staff, for example, would schedule EL requests by mid-October.
• Leave encashment applies to EL at resignation, retirement, or termination. The employer pays unused EL days at the daily wage rate. This is a statutory right, not a company benefit.
• Accumulation beyond the cap gets forfeited. If your state caps carry-forward at 30 days and an employee has 30 days banked, new EL days earned that year lapse unless used.

At Petpooja, across 30,000+ Payroll clients, we see the most leave-policy confusion around EL carry-forward rules. Businesses in Maharashtra assume 30 days because the Factories Act says 30 days, but the state Shops and Establishments Act may allow more. The software needs to handle whichever cap applies to your establishment type.

What Is Comp-Off (Compensatory Off)?

A comp-off is time off granted when a worker covers a scheduled holiday, a week-off, or a public holiday. The Factories Act requires compensatory holidays under Section 52 when an employer denies a worker their weekly rest day. Most companies require comp-off days to be used within 30 to 90 days before they lapse. It is not a statutory leave type in the same way CL, SL, and EL are. Instead, comp-off is an operational arrangement that most companies formalise through their internal leave policy.

For example, if a logistics coordinator in Bhiwandi works on Republic Day because a shipment cannot wait, the employer grants one comp-off day to be used within 30-60 days. If a QSR kitchen supervisor in Electronic City covers a Sunday shift during peak season, that Sunday generates a comp-off.

How comp-off typically works:

• The employee works on an off-day or holiday, and the manager approves a comp-off credit in the attendance system.
• The employee must use the comp-off within a fixed period, typically 30 to 90 days depending on company policy. After that, it lapses.
• Some companies allow comp-off carry forward to the next quarter; others expire it at month-end. Our detailed guide on comp-off leave rules and carry forward covers the full policy framework.
• Comp-off is not encashable in most companies. It must be taken as time off, not paid out.

The tricky part is tracking. A chain of 8 restaurant outlets in Pune generates dozens of comp-off credits every month across weekend and festival shifts. Without a system that logs these per employee, comp-offs either get forgotten or double-claimed. Payroll software with a built-in leave management module removes this manual burden.

How Do These Leave Types Affect Payroll?

CL and SL are fully paid with no salary deduction. EL is paid during employment and encashable at exit as part of the full and final settlement. Comp-off replaces the holiday worked. When all balances hit zero, any additional absence becomes Loss of Pay with a per-day deduction. Here is the breakdown:

• CL and SL are fully paid leave. The employee’s gross salary stays the same for that day. No deduction.
• EL is paid leave while active, and encashable on exit. During employment, an EL day is a normal paid day. At separation, unused EL days become part of the full and final settlement.
• Comp-off is a paid day off that replaces the holiday or week-off the employee worked.
• Loss of Pay (LOP) kicks in when an employee exhausts all leave types and still takes a day off. A garment factory supervisor in Surat who has used all CL, SL, and EL will see a salary deduction for any additional absence.

At Petpooja, the Payroll software maintains separate CL, SL, EL, and comp-off balances per employee, auto-deducts from the right category when the manager approves leave, and marks LOP when balances hit zero.

Conclusion

CL handles short unplanned absences and expires yearly. SL covers medical needs with a doctor’s note beyond 2-3 days. EL is the only leave that accrues, carries forward, and pays out at exit. Comp-off compensates for holiday work and must be used within a set window.

The exact entitlements depend on your state’s Shops and Establishments Act or the Factories Act. Your company policy can add to these minimums but cannot go below them.

Frequently Asked Questions