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All-in-one HR platform · v2.0
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All-in-one HR platform · v2.0
14-day free trial · No credit cardhello@HrMagix.com
Moving unused leave from one leave year into the next, usually up to a cap, with anything above the cap lapsing or being encashed. The Factories Act and state Shops and Establishments Acts set limits on how much earned leave can be accumulated, and the policy must sit within them.
Carry forward happens once a year at the close of the leave year, usually 31 December or 31 March. HR runs the year-end process: unused balances are moved to the new year up to the cap in the policy, anything above the cap lapses or is encashed, and employees are told their opening balance.
Example with illustrative figures: a policy allows earned leave to carry forward up to 45 days. An employee with 38 days carried in and 12 days unused this year would reach 50, so 45 move forward and 5 lapse or are paid, depending on the policy.
Caps and accumulation limits under the Factories Act and state Shops and Establishments Acts vary, and the labour codes, in force since 21 November 2025, and the state rules under them may change them, so check the rule that applies to each site. The common mistake is letting casual or sick leave carry forward by default when the policy intends them to lapse.
Usually yes. The employer's policy sets a cap, and state Shops and Establishments rules may set their own limits, which vary by state.
It may lapse or be encashed, depending on the policy. Employees should be told before the year ends so they can plan.
Often not. Casual leave usually lapses at year end, while sick leave may carry forward up to a cap in some policies.
At the end of the leave year, before new entitlements are credited. Running it late often causes temporary negative or duplicate balances.
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