India does not have a single national sick leave statute. Instead, sick leave is governed by a patchwork: the Factories Act 1948 for industrial workers, the state-level Shops and Establishments Acts for everyone else, the Employees’ State Insurance Act 1948 for sickness benefit, and individual contracts that often top up the statutory floor. The typical entitlement most Indian employees see is around 12 days of paid sick leave per year — but the precise number, the qualifying period, and the encashment rules depend heavily on which state you employ in.

This guide cuts through the patchwork: the Factories Act position, the most common state Shops Acts (Maharashtra, Karnataka, Tamil Nadu, Delhi, Telangana), how ESI integrates, and the pitfalls that come up most often.

Key takeaways

  • There is no single national paid sick leave statute. Entitlements come from the Factories Act 1948 (for factories) or the relevant state Shops and Establishments Act (for offices, shops, and establishments).
  • A typical entitlement is 12 days of paid sick leave per year, though Maharashtra, Karnataka, and other states have specific figures.
  • Many state Shops Acts use a combined “casual + sick” leave structure or grant sick leave separately at around half pay or full pay.
  • Employees covered by the Employees’ State Insurance (ESI) scheme get sickness benefit from ESI rather than employer-paid sick leave for the duration of certified illness.
  • The Code on Social Security 2020 and Occupational Safety, Health and Working Conditions Code 2020 are notified but their implementing rules continue to be rolled out — until full notification, the 1948 Acts and state Shops Acts continue to govern.

The Factories Act position

The Factories Act 1948 applies to manufacturing establishments. It provides for annual leave with wages under section 79, but it does not specify a statutory paid sick leave entitlement separately. In practice, factory workers’ sick leave depends on:

  • The state Shops and Establishments Act extending to factory workers in some states
  • The factory’s standing orders certified under the Industrial Employment (Standing Orders) Act 1946
  • The Employees’ State Insurance Act 1948 for workers earning within the ESI wage ceiling

For workers covered by ESI, paid sick leave from the employer is largely replaced by sickness benefit from ESI — paid at around 70% of average daily wages from the fourth day of certified sickness, for up to 91 days in any two consecutive benefit periods.

State Shops and Establishments Acts

For non-factory employees — offices, shops, restaurants, IT companies — the state Shops and Establishments Act of the state where the establishment is registered governs sick leave. The headline figures vary:

State / UTTypical sick leave entitlementNotes
Maharashtra8 days per year (after 3 months service)Plus 7 casual leave days under the Maharashtra Shops Act 2017
Karnataka12 days per year (combined casual + sick under some interpretations)The Karnataka Shops Act prescribes 12 days, generally split between casual and sick
Tamil Nadu12 days per yearUnder the Tamil Nadu Shops Act 1947
Delhi12 days per year (combined casual + sick)Under the Delhi Shops Act 1954
Telangana12 days per yearMirrors the legacy Andhra Pradesh provisions
West Bengal14 days sick leave at half wagesDistinctive half-pay structure

These are illustrative — every state has its own interpretation, and several states (notably Karnataka and Maharashtra) have updated their Shops Acts in the past decade. Always check the operative Act and rules for the specific state where the employee is based.

How ESI integrates

The Employees’ State Insurance scheme covers employees earning up to the ESI wage ceiling (currently ₹21,000 per month for most employees, ₹25,000 for employees with disabilities). ESI provides sickness benefit to insured persons:

  • Standard sickness benefit: around 70% of average daily wages, paid for up to 91 days in any two consecutive benefit periods, after a contribution period of 78 days in the relevant contribution period.
  • Extended sickness benefit: for specified long-term diseases, up to two years at a higher rate.
  • Enhanced sickness benefit: at full wages for sterilisation procedures.

For ESI-covered employees, the practical position is that the employer pays for the first three days of certified sickness (where required by the certified standing orders or contract), and ESI takes over from day four. Employees outside the ESI ceiling rely entirely on the state Shops Act and contractual sick leave.

Pay during sick leave

Where the state Shops Act prescribes sick leave at full wages, “wages” generally means basic plus dearness allowance, and sometimes house rent allowance and other fixed allowances depending on the state’s interpretation. Where sick leave is at half wages (West Bengal is the notable example), the same definition applies but at half rate.

For ESI sickness benefit, the rate is set under the ESI scheme — currently around 70% of the standard daily benefit rate, calculated from the contribution wage history.

Medical certification

Medical certification practice varies across states, but a common rule is:

  • Up to 2 days: self-certification often accepted under company policy
  • 3 or more consecutive days: medical certificate from a registered medical practitioner usually required
  • For ESI sickness benefit: certification by an ESI Insurance Medical Officer or an ESI panel doctor is required

Employers operating across multiple states typically standardise on a 3-day threshold for company-required certificates, while accepting that ESI claims need ESI-specific certification.

Employer obligations

Indian employers have four core obligations on sick leave that apply regardless of state:

  1. Identify the applicable law — Factories Act, the relevant state Shops Act, and ESI coverage status — for each employee.
  2. Provide the statutory minimum under that law and pay at the prescribed rate.
  3. Keep leave records as required by the applicable Act and rules — typically a leave register and pay slips itemising leave taken.
  4. Register and contribute to ESI for eligible employees, ensuring sickness benefit claims are processed promptly.

Multi-state employers commonly adopt a “best-of” leave policy that gives all employees the most generous of the applicable state minimums, simplifying administration.

Common pitfalls

Indian employers — particularly multi-state IT and services companies — fall into the same five traps:

1. Applying one state’s rules nationally

A Bangalore-headquartered company applying Karnataka leave rules to a Mumbai office is technically non-compliant if Maharashtra’s rules are different. The statutory entitlement is set by the establishment’s location, not the headquarters.

2. Confusing casual and sick leave

Several state Shops Acts grant a combined casual + sick leave pool, while others grant them separately. Employers who treat them as fungible when the law treats them separately end up under-providing one type.

3. Ignoring ESI

ESI-covered employees are protected by sickness benefit, not by employer-paid sick leave alone. Failing to register eligible employees for ESI is a Labour Department finding waiting to happen, and repeats of unpaid sick leave for ESI-eligible workers can attract penalties under the ESI Act.

4. Year-end forfeiture without notice

Several state Shops Acts allow carry-over of unused sick leave up to a cap. Wholesale year-end forfeiture without statutory authority is a common dispute, and the resulting claim is enforceable through the Labour Commissioner.

5. Treating contract pay as basic pay

Where the state law specifies “wages”, the definition typically includes dearness allowance and certain fixed allowances. Calculating sick leave pay on basic alone is a frequent underpayment.

For broader context on Indian leave entitlements, see our overview of annual leave in India and the main types of leave employers manage.

Frequently asked questions

How many days of sick leave do Indian employees get?

It depends on the state and the applicable law. The most common figure is 12 days per year, though Maharashtra prescribes 8 days of sick leave plus 7 days of casual leave under its 2017 Shops Act. ESI-covered employees rely on ESI sickness benefit rather than employer-paid sick leave.

Is there a national paid sick leave law in India?

Not as a single statute. Sick leave is governed by the Factories Act 1948 for factories, the state Shops and Establishments Acts for offices and shops, and the ESI Act 1948 for ESI-covered employees. The 2020 labour codes will eventually consolidate parts of this framework once fully notified.

Does ESI replace employer-paid sick leave?

For ESI-covered employees, ESI sickness benefit substantially replaces employer-paid sick leave for certified illness from day four onward. Employers typically pay for the first three days under standing orders or contract, then ESI takes over.

Are casual leave and sick leave the same?

In some states (Karnataka, Delhi) the Shops Act treats them as a combined or interchangeable pool; in others (Maharashtra, Tamil Nadu) they are separate categories. Read the operative state Act for the answer in your state.

Can sick leave be encashed in India?

Encashment of sick leave is unusual under Indian law. The state Shops Acts typically allow carry-over up to a cap but do not require encashment. Some employers offer encashment as a contractual benefit.

What is the medical certificate requirement?

Practice varies, but a common rule is 3 or more consecutive days requires a medical certificate from a registered practitioner. ESI claims require certification by an ESI Insurance Medical Officer or panel doctor.

Putting it into practice

If you employ staff in India, the practical to-do list is short:

  1. Map each establishment to the applicable law: Factories Act, state Shops Act, and ESI coverage.
  2. Confirm your leave policy meets or exceeds the statutory entitlement in each state where you operate.
  3. Register eligible employees for ESI and ensure sickness benefit claims are supported, not blocked.
  4. Track casual and sick leave separately where the state law treats them separately.
  5. Keep a leave register and pay slips that itemise leave taken — Labour Department audits start there.
You can take advantage of the free 14 days trial and explore Leave Balance.

A modern leave management system handles per-state sick leave rules, integrates with ESI claim workflows, and keeps the leave register clean — so your Bangalore, Mumbai, Chennai, and Delhi offices can each apply the right state’s rules without spreadsheet duplication.

Sources

Last updated: 5 May 2026. This article is general guidance, not legal advice. Indian sick leave is state-specific; for definitive advice, consult a labour law practitioner in the relevant state.