Worked 6 months? You now qualify for earned leave
05 Apr 2026

The Indian government has announced a new labor code, the Occupational Safety, Health and Working Conditions Code (OSH Code), 2020. The code comes with several major changes for workers.

One of the key changes is that workers are now entitled to earned leave after just six months (or 180 days) of continuous work. This is a major reduction from the previous requirement of 240 days.

Encashment of unused leaves
Policy change

The new labor code also allows for the annual encashment of unused leaves, a major monetary benefit for employees in roles where taking time off is difficult.

However, these provisions do not apply to managerial or administrative staff earning over ₹18,000 per month.

The government announced the OSH Code on November 21, 2025.

Uniform earned leave entitlement
Code provisions

The new labor code also provides for a uniform earned leave entitlement, along with carry forward and encashment entitlement for workers.

This will be applicable uniformly to all workers across India, subject to any specific state rule that may apply.

The code also gives a worker the right to encash earned leaves beyond the prescribed limit on an annual basis while still in service.

Protects workers from losing leave entitlement
Equity provision

The new labor code also tackles an inequity where if an employer refuses to sanction a leave that a worker has applied for, it cannot be forfeited and must be carried forward without any limit.

Earlier, many states allowed these leaves to lapse without any payment once the limit was crossed.

Now, with the OSH Code's annual encashment feature, workers can convert unused leaves into compensation.

Key highlights of OHS Code, 2020
Leave accumulation

Tarun Garg, Director at Deloitte India, said under the new labor code (OSH Code), employees can accumulate and carry forward leaves up to 30 days to the succeeding year.

If accumulated leaves exceed this limit, employees are entitled to encash such excess leaves.

They can also demand encashment of all their accumulated leaves at the end of a calendar year.

Operational constraints
Employee protection

The new labor code (OSH Code, 2020) also provides a safeguard where if an employee who has applied for leave but such leave is not given by the employer, then such refused leaves shall be carried forward without any limit.

This provision clearly protects and safeguards the employees from losing their leave entitlement due to operational constraints.