“Can I carry forward all my leaves, or will they lapse on December 31st?”
In the Indian corporate world, this remains the “Golden Question” every year-end. With parts of the New Labour Codes notified in late 2025 and gradually adopted by states, 2026 is shaping up as a transition year. For HR heads and employees alike, knowing the specific limit for your state can mean the difference between a valuable payout and a lost benefit.
1. The OSH Code 2020: The Federal Baseline
Under the Occupational Safety, Health and Working Conditions Code (2020), which serves as the central benchmark:
- Carry Forward Limit: Employees are entitled to carry forward up to 30 days of annual leave with wages.
- Encashment: Any leave balance in excess of these 30 days may be encashed, subject to state-specific rules and employer standing orders.
Note: The Code sets minimum standards. States may prescribe higher limits, and establishments must follow whichever rule is more beneficial to employees.
2. Indicative State-Specific Leave & Encashment Limits (2026)
While the New Codes provide a framework, the Shops and Establishments Acts of individual states continue to define maximum accumulation and entitlement. If your leave balance exceeds these “Max Accumulation” limits, you may be entitled to encashment or the leave may lapse, depending on state-specific notifications.
| State | Max Accumulation (Days) | Leave Entitlement (Earned/Privilege) |
| Maharashtra | 45 Days | 1 day for every 20 days worked |
| Delhi | 45 Days | 15 days per year |
| Karnataka | 30 Days | 1 day for every 20 days worked |
| Tamil Nadu | 45 Days | 12 days per year |
| Andhra Pradesh | 60 Days | 15 days per year |
| Gujarat | 63 Days | 1 day for every 20 days worked |
| Uttar Pradesh | 45 Days | 15 days per year |
| Madhya Pradesh | 90 Days | 30 days per year |
| Rajasthan | 30 Days | 18 days per year |
| West Bengal | 28 Days | 1 day for every 20 days worked |
| Kerala | 24 Days | 12 days per year |
| Telangana | 60 Days | 15 days per year |
| Haryana / Punjab | 30 Days | 1 day for every 20 days worked |
| Bihar / Jharkhand | 45 Days | 1 day for every 20 days worked |
⚠️ These figures are indicative and based on statutory provisions. Employers should always verify with the latest state notifications and standing orders before applying them.
For detailed information on state-specific leave provisions, please refer to our dedicated resource page: https://www.key4comply.com/readyrecknor-leave-working-hours/.
3. Key Compliance Highlights for 2026
- The 50% Wage Rule: Leave encashment is calculated on the “New Wage” definition. Basic Pay + DA must constitute at least 50% of gross wages. This generally increases the per-day encashment amount compared to earlier calculations.
- Full & Final Settlement: Under the New Codes, employers are required to settle all dues, including leave encashment, within 2 working days of resignation or termination. ⚖️ Implementation timelines may vary depending on state adoption.
Disclaimer
This article is intended for educational purposes only and does not constitute legal advice. Leave rules and encashment policies vary by establishment, standing orders, and state-level notifications issued by the Ministry of Labour and Employment. Readers should consult a qualified labour law advisor or check the latest government notifications before acting on this information.