Restricted holidays in India are holidays that employees can choose to observe based on their religious or personal beliefs, rather than holidays the employer mandates for all staff. Unlike gazetted holidays, restricted holidays are not days on which the establishment must close.

For employers in India, managing restricted holidays requires a clear policy that respects religious diversity while maintaining business operations. This guide explains what restricted holidays are, how they differ from gazetted holidays, and how to handle them as an employer.

This article is general information, not legal advice.

Key Takeaways

  • Restricted holidays are optional holidays employees can elect based on their religion
  • Gazetted holidays are mandatory — the establishment must observe them
  • Employees are typically entitled to 2-3 restricted holidays per year
  • Employers must allow employees to choose which restricted holidays to observe
  • Compensatory off for restricted holidays is not mandatory but is common practice

Restricted vs Gazetted Holidays

The distinction between restricted and gazetted holidays is fundamental to Indian leave compliance:

Gazetted Holidays

Gazetted holidays are officially notified by the government and mandatory for all establishments. These include national holidays like Republic Day, Independence Day, and Gandhi Jayanti, plus religious holidays like Diwali, Christmas, and Eid.

  • Establishments must remain closed or provide an alternative day off
  • All employees are entitled to these holidays
  • Banks, government offices, and most private companies observe them

Restricted Holidays

Restricted holidays are holidays that employees may observe based on their religious or community affiliation. The government publishes a list of restricted holidays, but the employer decides how many to grant.

  • The establishment is not required to close
  • Employees choose which restricted holidays to observe
  • Typically 2-3 days per year are offered

Common Restricted Holidays in India

Here is a representative list of restricted holidays commonly offered:

Holiday Approximate Date
Makar Sankranti 14 January
Pongal 14-17 January
Basant Panchami February
Maha Shivaratri February/March
Holi March
Shab-e-Qadr Varies (Ramadan)
Jamat-ul-Vida Varies (Ramadan)
Guru Tegh Bahadur Martyrdom Day November
Christmas Eve 24 December
Guru Gobind Singh Jayanti December/January
Mahavir Jayanti March/April
Parsi New Year August
Onam August/September
Durga Ashtami September/October
Karva Chauth October/November
Chhat Puja October/November

Employer Obligations

Number of Restricted Holidays

The Shops and Establishments Act applicable in your state typically specifies how many restricted holidays an employee can take. Common provisions:

  • Most states: 2-3 restricted holidays per year
  • Some states: Up to 5 restricted holidays
  • Central government: 2 restricted holidays per year

Allowing Employee Choice

You must allow employees to choose which restricted holidays to observe. This means:

  • Publishing the full list of restricted holidays at the start of the year
  • Asking employees to select their preferred days in advance
  • Honouring those selections unless there is a genuine business reason to refuse

Scheduling Restrictions

You can set reasonable conditions:

  • Require advance notice (typically 15 days)
  • Limit the number of restricted holidays per employee
  • Restrict certain days if business operations require it (e.g., year-end closing)
  • Require that restricted holidays not coincide with already-booked annual leave

Pay Rules for Restricted Holidays

If the Employee Takes the Day Off

  • Monthly-rated employees receive their full salary for the restricted holiday
  • Daily-rated employees receive wages for the day as if they had worked
  • The holiday counts as a paid day off

If the Employee Works on a Restricted Holiday

  • If the employee chooses not to observe the restricted holiday and works instead, they receive normal pay
  • No double wages or compensatory off is required for restricted holidays

If the Restricted Holiday Falls on a Sunday

  • If a restricted holiday falls on a Sunday, the employee is generally not entitled to a substitute day
  • Some employers allow the employee to take the following Monday off instead

Managing Restricted Holiday Requests

Best Practice Policy

Create a written policy that covers:

  1. How many restricted holidays each employee can take
  2. How to request them — submit a form by a specified deadline
  3. What happens if the request conflicts with business needs
  4. Record-keeping requirements

Communication

At the start of each year:

  • Share the full list of restricted holidays
  • Ask employees to submit their selections by a deadline
  • Confirm approved dates in writing
  • Add approved dates to the leave management system

Handling Conflicts

If too many employees request the same restricted holiday:

  • Apply a first-come, first-served approach
  • Stagger approvals to maintain minimum staffing
  • Offer alternative days where possible
  • Document the decision and the reason

Common Mistakes

Not Offering Restricted Holidays

Some employers ignore restricted holidays entirely, offering only gazetted holidays. This denies employees their right to observe their religious traditions and can lead to grievances.

Treating Restricted Holidays as Unpaid

Restricted holidays are paid days off. Reducing an employee’s salary for taking a restricted holiday violates the Payment of Wages Act.

Failing to Publish the List

If you don’t publish the restricted holiday list, employees cannot exercise their choice. Publish the list well in advance and maintain records of which holidays each employee selects.

Allowing Unlimited Restricted Holidays

Without a cap, some employees may attempt to take excessive restricted holidays. Set a clear limit and apply it consistently.

Frequently Asked Questions

How many restricted holidays can an employee take?

The number varies by state and the applicable Shops and Establishments Act. Most states allow 2-3 restricted holidays per year. Check your state-specific legislation for the exact entitlement.

Can an employer deny a restricted holiday request?

You can deny a request if it creates a genuine operational hardship (e.g., insufficient staffing on a critical day). However, you must have a reasonable basis and should offer an alternative day where possible.

Do restricted holidays carry over if unused?

This depends on your policy. Some employers allow carryover; others treat restricted holidays as use-it-or-lose-it. There is no statutory requirement to carry them over.

Can an employee take a restricted holiday from a religion different from their own?

In practice, restricted holidays are tied to the employee’s religious or community identity. An employee cannot claim a restricted holiday from a tradition they do not follow. However, some employers adopt a more flexible approach.

Are restricted holidays the same as optional holidays?

Yes. The terms “restricted holiday” and “optional holiday” are used interchangeably in Indian employment contexts. Both refer to holidays the employee may choose to observe.

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