India mandates earned leave after 180 days and annual encashment
Change
India mandated that workers qualify for earned paid leave after 180 days of continuous service, must carry forward any leave an employer refused without forfeiture, and made annual encashment of excess accumulated leave available to employees while still employed, excluding managerial and supervisory staff earning above Rs 18,000 per month.
Why it matters
Employers now face a binding obligation to preserve refused leave balances indefinitely and to enable or pay out encashment for surplus leave on a yearly basis, increasing recurring payroll and recordkeeping duties. Because several states have not yet notified the Occupational Safety, Health and Working Conditions Code (OSH Code), implementation timing will vary across sites and requires site‑level legal tracking.
Implications
- • Human resources teams at employers must revise leave-accrual rules and update leave ledgers to start recognising earned-leave entitlements in line with the new code or face statutory leave claims.
- • Payroll and finance teams at employers must provision cash and process annual encashment payments for accumulated leave above the 30-day carry threshold or when demanded at calendar year-end, or face immediate pay-out obligations.
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