Holiday & Leave Regulations

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This article intends to highlight the Holiday and leave regulations for Establishments covered under The Karnataka Shops and Commercial Establishments Act, 1961.

You would be surprised to note that more than 25% of the salaries paid to employees are towards their leave! How many businesses have factored this in their costs?


Holidays and Leave policies (Paid Leave/ holiday) of establishments are generally regulated by the nature of business, project deadlines, Global HR policy, and the Geographical area the companies cater to. Though there is some flexibility built into legislations on the holidays that can be declared there are some base rules which provide the framework for your Holidays and leave policy.


There are Two Primary Laws which govern the holidays and leave policy of your company. In Karnataka they are:-


holidayThe Karnataka Industrial. Establishments (National and Festival Holidays) Act, 1963, and


The Karnataka Shops and Commercials Establishments Act, 1961


Similar legislations have been enacted in other States.


The Holidays and Leaves under these Statutes can be categorized as follows:-


National Holidays: These holidays are declared compulsorily and the establishments do not have flexibility in timing them


26th January, 1st May, 15th August, 2nd October and 1st November


Festival Holidays: Though the festival holidays are compulsory the establishment has the flexibility to choose from a list of about 50 festivals available in the Schedule to The Karnataka Industrial, Establishments (National and Festival Holidays) Act, 1963. Five festival holidays in each calendar year have to be declared in addition to the National Holidays.


General Elections: In case of general elections to the Lok Sabha and Vidhana Sabha and in case of any by election, a holiday needs to be declared to all employees on polling day.


Weekly Holidays: Every establishment is required to remain closed for atleast one day of the week. The employer shall fix such date at the beginning of the year.


Information Technology Establishments; Information Technology enabling services or establishments; & Bio-Technology and Research Centres in addition to certain other establishments are exempt from the provisions of Weekly Holidays.


Annual leave with wages: Every employee in an establishment is entitled to leave with wages and is calculated as follows:-


Earned Leave: One day for every twenty days work performed by him, in case of an adult. This works out to about 1.5 Days a month and 18 Days per annum.


Contingency/ Sick/ Medical Leave: Every employee is also entitled to leave with wages for a period not exceeding twelve days, on the ground of any sickness incurred or accident sustained by him or for any other reasonable cause.


Carry forward of Leave balances: If an employee does not in any one calendar year take the whole of the leave allowed to him as above, any leave not taken by him shall be added to the leave to be allowed to him in the succeeding calendar year.


The total number of the days of leave that may be carried forward to a succeeding year should not exceed thirty days. The excess leave will either expire or will have to be paid to the Employee as Leave Encashment


Other leaves include Maternity leave, ESI leave etc.: The national, Festival and Weekly holidays declared by the establishment needs to be prominently displayed at the place of business and should be intimated to the Labour Department, every Calendar year.


The table below summarizes the Minimum Leave/ Holidays requirements for an establishment registered under The Karnataka Shops and Commercial Establishments Act, 1961

Sl     Type of  Leave         Number
No.   Holiday                    of Days


1      National Holidays          5


2      Festival Holidays           5


3      Weekly Holidays           52            


4      Earned Leave              18            


5      Contingency Leave       12            


        Total                           92




The total of 92 days mentioned in the above table may seem quite a lot but in actual practice, if one were to include holidays that an employer is forced to declare because of the frequent bandhs, demise of prominent personalities etc., we are left wondering whether we work at all!


Disclaimer from the author: This article is intended to serve as a guide to readers and does not purport to be a legal document. In case of any variance between what has been stated in this article and the relevant Act, Rules, Regulations, Policy Statements, etc, the latter shall prevail. 


Raghunandan is the Co-founder and Director of Bizprout Corporate Solutions Private Limited and a Chartered accountant. Bizprout provides solutions in the Accounting and Payroll Space.


Issue BG90 Sept 08