What is Earned leave?

Definition

Earned leave is paid annual leave that accrues with days worked, usually carries forward, and is generally encashable on exit. It is the leave type most closely governed by statute.

How it works

Earned leave accrues at a rate tied to days actually worked rather than being granted in a block at the start of the year, which is why an employee who joins in October has a smaller entitlement than one who joined in April.

What it means in India

Entitlement comes from the state Shops and Establishments Act for shops and commercial establishments, and from the Factories Act 1948 for factories, where section 79 provides annual leave with wages for workers who have worked a qualifying number of days in the preceding year, at a rate of one day for every twenty days worked for adults. State acts set their own accrual rates, carry-forward caps and encashment rules, and they genuinely differ, so the entitlement is a question about your state rather than a national number.

What people get wrong

• Copying a leave policy from a company in another state. The accrual rate and the carry-forward cap are state rules.
• Capping carry-forward below what the applicable act allows, which is unenforceable to that extent.
• Treating earned leave as lapsing silently at year end where the act requires carry-forward or encashment.

Terms this one depends on

More on leave

Where this shows up in practice

Almost everything on this page ends up as a line on a payslip or a figure in a register. Shiftelio keeps attendance, leave, salary structure and the statutory deductions in one place, so the number in the letter and the number in the payslip come from the same record.