How to calculate earned leave

The statutory rule: one day for every 20 days worked

The OSH Code sets the floor. Once a worker completes 180 days of work in a calendar year, they earn one day of paid annual leave for every 20 days worked. Carry forward is capped at 30 days, and the worker may ask for encashment of unused leave at the end of the year; see the leave entitlement rules. Two things matter in practice. The 180-day condition decides whether the worker qualifies at all, and the count of days worked decides how much leave is earned. Check your state's rules on which days, such as periods of leave, count toward the 180 days.

Worked examples under the statutory rule

Ramesh, a machine operator in Rajkot, works 260 days in calendar year 2026. He crosses 180 days, so he qualifies, and his leave earned is 260 / 20 = 13 days. Kishore works 250 days, which gives 250 / 20 = 12.5 days; your policy decides whether the half day is kept as a half day or rounded, and the same rounding must apply to everyone. Shabana works only 172 days because of a long unpaid absence. She has not completed 180 days of work in the year, so the statutory entitlement does not arise for 2026, although your own policy may still give her leave.

Company accrual: a fixed credit each month

A simpler approach credits earned leave monthly, such as 1.5 days a month for 18 a year. Credit it at the end of each month for the month just worked, and prorate the first and last months by days of employment. A joiner on 11 April is employed for 20 of April's 30 days, so she gets 1.5 x 20 / 30 = 1 day; a joiner on 21 April gets 1.5 x 10 / 30 = 0.5 day. Once a year, check that the accrual never falls below the statutory figure for any worker. A full-year employee on 18 days is comfortably above the 13 days that 260 days of work would earn.

Mistakes to avoid

Earned leave errors show up at the worst moment, in a full and final settlement where the balance becomes money. Check your calculation against these mistakes before year end, and again whenever you change the policy or the payroll system.

• Counting calendar days instead of days actually worked under the statutory rule.
• Forgetting the 180-day condition for workers with long absences.
• Letting a company accrual fall below the statutory entitlement for some workers.
• Rounding fractions differently for different employees.
• Ignoring the 30-day carry forward cap, or refusing a year-end encashment request.

Step by step

1. Decide your method. Choose between counting days worked under the statutory rule and a fixed monthly accrual, and state the method in the leave policy.
2. Count days worked in the year. From closed attendance months, total the days each worker actually worked between 1 January and 31 December.
3. Check the 180-day condition. Confirm each worker has completed 180 days of work in the year, and check which days count as work under your state's rules.
4. Divide by 20. Leave earned = days worked / 20. Apply your rounding rule for fractions the same way to every employee.
5. Run the monthly accrual if you use one. Credit the monthly amount at month end, prorated for joiners and leavers. ZeniaHR's Leave Ledger runs monthly accrual with pro rata for joiners and leavers, rounded to half a day and capped at a maximum balance.
6. Compare accrual with the statutory figure. Once a year, check that no worker's accrual falls below the statutory entitlement, and credit any shortfall before year end.
7. Apply carry forward and encashment. At year end, carry forward up to the cap and process requests to encash unused leave. In ZeniaHR, leave encashment adds an earning to payroll.

Frequently asked questions