How to handle leave without pay

When leave without pay applies

LWP is approved leave, which is what separates it from absence without information. Set out in the policy when it can be granted, who approves it, and how long a spell can run before it needs the HR head's or management's approval. The usual cases are listed below.

• The paid leave balance is exhausted and the employee needs more time off.
• A request goes beyond the negative balance a leave type allows.
• Long personal needs such as caring for a family member, higher studies or a family event abroad.
• Sickness that outlasts the sick leave balance, supported by certificates.
• Absence the manager accepts after the fact, where the policy converts it to LWP.

How LWP reduces salary

Each LWP day reduces pay by the per day salary under your loss of pay basis. Nikhil, a store manager in Lucknow, has a gross salary of ₹45,000 and takes 3 days of LWP in October 2026, a 31-day month. On a calendar-day basis, per day pay is ₹45,000 / 31 = ₹1,451.61, so the 3 days reduce his pay by ₹4,354.84. On a 26-day basis, per day pay is ₹45,000 / 26 = ₹1,730.77, and the 3 days cost ₹5,192.31. The two bases differ by ₹837.47 for the same three days, so write the basis in the policy and use it every month. If LWP falls on both sides of a weekly off, your sandwich rule decides whether that day is unpaid too.

Effect on other entitlements

LWP days are unpaid, so PF and ESI are worked out on the lower wages earned in the month. Decide how LWP affects leave accrual under your policy: a monthly accrual may be prorated during long LWP spells. Under the OSH Code, annual leave depends on completing 180 days of work in the calendar year, so a long spell can affect eligibility; check which days count under your state's rules. Long spells may also touch probation dates, increment eligibility and service for gratuity, depending on your policy and the rules that apply, so settle these in writing in advance.

Managing long LWP spells

A spell of more than a few weeks needs a written agreement: start and end dates, whether the job is held, how benefits continue, how the employee stays in touch, and what happens if they do not return on the agreed date. Review it monthly. If the employee needs more time, they ask in writing before the end date. If they neither return nor respond, follow your absconding process step by step rather than treating the LWP as an automatic resignation.

Step by step

1. Set the LWP rules in the policy. State when LWP can be granted, who approves spells of different lengths and the documents needed for long or medical spells.
2. Use LWP after paid leave. Grant LWP once the relevant paid balance is exhausted, unless the employee asks to keep the balance and the policy allows that.
3. Approve it like any other leave. LWP goes through the normal approval chain. In ZeniaHR, LWP is one of the default leave types, and the leave rules set how far below zero other leave types can go.
4. Fix the loss of pay basis. Choose calendar days, working days or a fixed 26 or 30 days and use it every month. ZeniaHR's deduction policy sets the loss of pay basis, with branch overrides.
5. Recalculate statutory deductions. Work out PF, ESI and professional tax on the month's earned wages after LWP, not on the full-month salary.
6. Put long spells in writing. For spells beyond a few weeks, agree the dates, job and benefit terms and the return process in a signed letter.
7. Review LWP monthly. Look at LWP by person and team each month, and follow up where it points to a health, family or engagement issue.

Frequently asked questions