India’s new labour law framework is bringing a big shift in how companies manage employee leave—and it’s something every worker should understand.
With the implementation of the Occupational Safety, Health and Working Conditions (OSH&WC) Code, 2020 from November 21, 2025, leave policies are no longer just company rules.
They are becoming more structured, transparent, and employee-friendly.
Let’s break down what this really means in simple terms.
What Is the New OSH Code?
The OSH Code brings together 13 older labour laws into one system to improve working conditions across industries.
However, it does not apply to everyone.
It mainly covers:
Factory workers, contract workers, and migrant workers
Sales promotion employees and journalists
Supervisors earning up to Rs 18,000 per month
This means the new leave rules are mainly designed for workers in these categories—not all employees.
Major Changes in Leave Rules
The new system clearly defines how leave can be saved, used, or paid out.
Here are the key updates:
Limit on Carrying Forward Leave
Workers can carry forward up to 30 days of earned leave to the next year.
Any extra leave beyond this limit cannot keep piling up forever.
No Limit If Leave Is Denied
If a worker applies for leave and the company rejects it, that leave will not be lost.
In fact, it can be carried forward without any limit.
This protects employees from unfair rejection of leave requests.
Mandatory Leave Encashment
Unused leave will not simply disappear anymore.
Leave beyond 30 days is expected to be paid in cash
Employees can also encash leave when leaving a job
In short, your leave now has real financial value.
What This Means for Employees
These changes are clearly designed to benefit workers:
No more losing unused leave
Guaranteed payment for extra leave
Stronger protection against unfair leave rejection
Easier eligibility for paid leave (after 180 days instead of 240)
Overall, employees now have more control over their time off—and their rights are better protected.
What Companies Need to Do
Companies will need to quickly adjust to these new rules.
This includes:
Updating HR policies and employee handbooks
Improving leave tracking systems
Ensuring timely payment for unused leave
If companies fail to follow these rules, it could lead to disputes or penalties.
Why This Reform Matters
This change is part of a larger effort to make India’s labour laws simpler and fairer.
The goal is to:
Reduce confusion around leave rules
Prevent loss of earned leave
Improve work-life balance
Avoid large unused leave liabilities for companies
However, since the law mainly applies to “workers,” many white-collar employees may not benefit unless companies choose to extend similar policies.
The Bottom Line
The new leave rules mark a clear shift—from company-controlled policies to employee rights backed by law.
For workers, it means better protection of their leave and income.
For companies, it’s a signal to adapt quickly and stay compliant.
In simple terms: your leave is no longer just time off—it’s now a protected and valuable benefit.
