When an employee is unwell, they get paid time off. This time off is known as sick leave. It allows proper recovery and prevents illness from spreading at work.

Sick Leave vs Casual Leave vs Earned Leave:

Sick leave is strictly for health-related absence. Casual leave is for personal or urgent tasks. Earned leave is for long-planned breaks. Keeping these categories separate avoids confusion.

Paid Sick Days:

Employees continue to receive full salary during approved sick leave. This is not the case with unpaid leave.

Private Sick Pay Policy:

Every private company drafts sick leave rules that define entitlement, eligibility, documentation, and process. Some include carry-forward options, while others clearly disallow them.

Sick Policy for Work:

This covers how employees must inform managers, how HR should record leave, and how approval is processed.

Bottom line: Sick leave for employees protects both employees and employers.

Sick leave rules in India are not uniform. Sick policy for work depends on the Shops and Establishments Act of each state. It also depends on the Factories Act, and for certain employees, the Employees’ State Insurance Act (ESI).

Shops and Establishments Acts

Every state has its own Act covering shops, offices, and commercial establishments. These Acts define leave entitlements, including sick leave.

Tamil Nadu: Employees are entitled to 12 days of sick leave per year. These are in addition to casual leave.

Delhi: Employees are allowed 12 days of casual or sick leave annually. They can use casual leave for genuine medical reasons.

Maharashtra: Sick leave is granted under the Maharashtra Shops and Establishments Act. Many employers in Mumbai follow the 12-day benchmark.

Karnataka: Employees get sick leave apart from casual leave. For a longer absence, employers often ask for medical proof.

West Bengal: Employees usually get paid sick leave, capped at 12 days in a year. Rules are straightforward and easy to follow.

The Acts differ slightly in language, but the trend remains consistent: up to 12 paid sick days annually for private employees.

Factories Act, 1948

This applies to workers employed in factories. Under Section 79, employees who have worked at least 240 days in the previous year are entitled to annual leave with wages. This leave is not separately categorised as sick leave but is often used for sickness when required.

Employees’ State Insurance (ESI):

Employees under ESI get a sickness benefit when they cannot work due to illness. It is 70% of wages, paid in cash. The benefit is available for up to 91 days in a year, if the employee has worked at least 78 days in the contribution period.

State Compliance:

Employers must follow the state law when drafting sick leave rules. Many big companies often give more than the minimum to attract talent. Employees should read their appointment letters and HR manuals to know their exact entitlement.

Takeaway: Sick leave laws in India are state-driven. Employers must stay updated with these laws. Employees benefit from knowing both the legal baseline and company-specific rules.

While laws set the base, private companies shape their own rules to balance compliance, culture, and costs. These rules usually cover protocols regarding eligibility, number of days, accrual methods, carry forward, encashment, documentation, and clubbing.

1. Eligibility

Sick leave is generally available to full-time employees. Part-time employees may receive pro-rata benefits. Many employers wait until the employee completes the probation before giving full entitlement. Some modern startups, eager to attract young talent, grant sick leave benefits from day one.

2. Number of Days

Most private companies offer 6 to 12 paid sick days each year. Larger companies and multinationals often match or exceed the state-mandated 12 days. Small firms, especially SMEs, tend to stick to the lower end of the range. Some IT companies provide additional “wellness days” to account for mental health.

3. Accrual Methods

Two common methods exist:

Annual credit: All sick leave days are credited at the beginning of the year. Employers inform the entitlement clearly. This system is transparent and easy to track.

Monthly accrual: Employees earn sick leave gradually every month. For example, one day per month, leading to 12 in a year. This method prevents misuse by employees who may resign mid-year.

Employers choose based on ease of management and budget control.

4. Carry Forward and Encashment

Most employers do not allow carry-forward of sick leave. They allow sick leaves for current illness and do not allow them to use them for building a reserve. Some employers allow a limited carry forward to help employees facing longer illnesses. Encashment of sick leave is rare in India, as it goes against the principle of using leave for recovery.

5. Documentation Rules

Employers often require a medical certificate if sick leave exceeds two or three consecutive days. Shorter absences may need only a self-declaration. Certificates usually mention the diagnosis period and the doctor's registration. Larger employers enforce strict documentation. Smaller firms may be flexible, but expect honesty.

6. Clubbing with Other Leave

If sick leave is exhausted, employers may allow employees to use casual leave or earned leave. Some firms allow clubbing freely, while others restrict it to maintain clarity. For example, earned leave may require advance notice, while sick leave is unplanned.

7. Policy Communication

The best employers make sick leave rules visible in employee handbooks, HRMS portals, and induction sessions. Clear communication reduces misuse and disputes. Employees understand their rights. Employers maintain control.

8. Best Practices

• Keep the sick leave policy simple and transparent.
• Apply rules consistently across all departments.
• Protect employee confidentiality when handling medical notes.
• Allow flexibility during public health emergencies
• Pair leave rules with group health insurance for employees.

Takeaway: A well-written sick leave policy gives employees confidence and gives employers order. Both sides benefit when policies are fair and clear.

Also read: Benefits of Group Health Insurance Policy for Employees

• A simple and clear process helps employees.
• Employees inform managers and HR as early as possible.
• The leave request is submitted via HRMS, email, or the company portal.
• Medical certificates are attached if absence crosses the limit set in the policy.
• Managers approve promptly. HR updates records as paid sick days.
• If hospitalisation is required, employees use group health insurance.
• Employees return with a fitness certificate if required.

Sick leave covers time, and corporate health insurance covers money. Together, they form complete protection. Group health insurance for employees covers hospitalisation, tests, and medicines, and reduces stress and supports early recovery.

Employers may extend cover to families of their employees. The benefits here include preventive health check-ups, maternity, and wellness support. SMEs use these plans to provide affordable cover for their employees.

Even a basic plan improves retention for the company and adds to its reputation in the industry. Employers who combine sick leave with insurance send a strong message of care. Employees usually respond to this with loyalty and performance.

• Even with rules in place, problems continue.
• Misuse: Some employees use sick leave as an extra holiday.
• Uneven enforcement: Managers apply policies differently. This creates unfairness.
• Short staffing: Mass absenteeism during flu season or pandemics affects productivity.
• Cost concerns: Employers feel the pressure of paying salary plus insurance.
• Mental health gap: Stress and burnout are rarely recognised in formal sick leave rules.

• Follow state laws without gaps.
• Provide at least basic group health insurance.
• Keep rules short and simple.
• Train managers to approve leave with empathy.
• Protect medical confidentiality.
• Allow flexibility for mental health.
• Review policies annually.

• Read offer letters and HR manuals carefully.
• Inform HR and managers early.
• Submit certificates when required.
• Use sick leave only for illness.
• Rest fully before resuming work.
• Use health insurance for hospitalisation.

Sick leave policies protect health and productivity. In India, rules are shaped by state Acts, the Factories Act, and ESI. Private companies then design their own sick leave policies on top.

When employers combine clear sick leave rules with Group Health Insurance for employees, they create a full support system. When employees use sick leave honestly, they strengthen workplace trust.

Startups can buy TATA AIG small business insurance and secure their small teams of skilled employees. With SME insurance, businesses can get financial security against uncertainties like fire, theft, burglary, employee injury etc., and focus on business development and growth.